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The Coor Problem

Here’s a letter to the Wall Street Journal:


Pete Coors is correct that aluminum prices in America are now unjustifiably high “[b]ecause aluminum suppliers and traders are taking advantage of the pricing umbrella that the tariffs put in place” (“Aluminum Suppliers Kick Our Cans,” July 23). But his interpretation of this reality is mistaken, and his proposed solution wrongheaded.

The very point of protective tariffs (such as those imposed by Pres. Trump on aluminum) is to create such an umbrella – that is, to allow domestic producers to raise prices despite their not having to pay the tariffs. And so contrary to Mr. Coors’s claim, high prices charged by protected aluminum producers reflect no malevolent business practices beyond their support of the tariffs.

It follows that Mr. Coors is mistaken to insist that “government intervention and oversight are necessary” to bring aluminum prices down. The only government action necessary – and sufficient – to reduce aluminum prices to competitive levels is for it to abolish the tariffs.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030