President Donald Trump has touted plans for a massive $4 billion aluminum smelting plant in the small town of Inola, Oklahoma, as a prime example of his administration’s efforts to bring manufacturing back to the United States. Instead, the project is demonstrating a pitfall in populist economics. Promising to restore industrial jobs is popular in the abstract, but the reality on the ground is more complicated, even in a state Trump won by more than 30 points.
Last week, Oklahoma Attorney General Gentner Drummond (R), who is running for governor, asked a federal court to block construction of the 350-acre development. He was tapping into intense anger in Inola, a conservative town outside Tulsa. In June, the town’s council issued a temporary moratorium on the smelter project despite a direct plea from the president to approve it “without delay.”
Though the plant would create about 1,000 permanent manufacturing jobs, locals reasonably fear that pollution could harm residents and nearby agriculture. Aluminum smelting has real environmental fallout. Others are concerned that the energy-intensive facility would compete for electricity resources and jack up ratepayers’ bills, a familiar point of contention in the fight over data centers.
But unlike data centers, which are being built to satisfy exploding market demand, the aluminum smelter could face economic headwinds. It would be propped up by hundreds of millions of dollars in subsidies and incentives from both the federal government and the state — a classic exercise in industrial policy.
The U.S. used to be one of the world’s top producers of aluminum, but high energy costs have driven smelting capacity to other countries in the past two decades. No aluminum smelter has been built in the U.S. since 1980.
The administration has argued that the Inola plant is necessary for national security. But the largest source of U.S. aluminum imports is Canada, not China. The U.S. and Canadian aluminum markets have been intertwined because of their competitive advantages: Canada’s low cost of energy gives its manufacturers an edge on primary smelting, while U.S. manufacturers have focused on recycling the metal.
Trump disrupted that balance by imposing a 50 percent tariff on Canadian aluminum products last year in an effort to boost U.S. manufacturing. The war with Iran also increased the cost of the metal by disrupting the supply of aluminum products from U.S. allies in the Middle East.
On the campaign trail, the president excited his base with the prospect of bringing back the working-class manufacturing economy of the 20th century. But as Oklahomans are noticing, heavy industry — for all its benefits — brings costs as well. Fans of industrial policy might need to recalibrate their ambitions.
The post Trump’s industrial policy meets red state politics appeared first on Washington Post.
