IN A well-functioning modern economy, businesses are generally free to buy and sell the things they need, absent a compelling public need for government intervention. By that definition, the United States does not, at the moment, have a well-functioning modern economy. Because of President Trump’s new high tariffs on steel and aluminum imports, companies across the country are being forced to ask the Commerce Department’s permission to import metal products without paying a tariff, as they were able to do before Mr. Trump imposed the levies for patently spurious national security reasons.
The latest absurdity is a request for tariff relief from one of the very aluminum producers in the United States that Mr. Trump’s tariffs ostensibly protect. Alcoa informed the Commerce Department that it needs 40,000 metric tons of specialized alloys, which it cannot produce in sufficient amounts itself nor purchase from another U.S.-based company, and must therefore buy from an Alcoa subsidiary in Canada. This is only the first of many such requests the company may be obliged to make. A senior Alcoa official informed the Wall Street Journal that the United States would need to import most of its aluminum even if the tariffs succeed in their declared objective of rekindling idled U.S. smelters.
Before Alcoa’s, more than 20,000 pleas for tariff relief had already flooded the Commerce Department bureaucrats whose job it is to grant such indulgences. The administration announced that tariff exclusions can be awarded for products found “not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality,” a phrase notable for its subjectivity. So far, overwhelmed officials at Commerce have found time to grant 1,300 exclusions to the steel tariffs (70 percent of which went to a single South Carolina firm) and denied 639, according to the New York Times. The precise criteria by which the Commerce Department staff decide whether to approve tariff exclusions remain unclear. What is clear is that the process represents an overwhelming burden on the department’s staff and a huge waste of everyone’s time and resources.
That’s what central planning does. Worse, it also politicizes — and, indeed, corrupts — economic life. Companies that feel threatened by any particular tariff exclusion request have the right to present their objections to the Commerce Department, meaning that each decision represents a high-stakes competition for federal favor between at least two companies with every incentive to influence it through lobbying, campaign contributions, you name it. So far, the winners have often been members of the steel industry, which demanded protective tariffs in the first place and in which several key Trump administration officials, starting with Commerce Secretary Wilbur Ross, spent much of their careers. But that could change as other companies learn that the way to get ahead in Mr. Trump’s economy is not making better products for the people, but making better connections in Washington.