When a government imposes tariffs, the stated intention is simple: protect domestic industry, support local jobs, and strengthen national economic resilience. Yet, from the perspective of Austrian economics, specifically the insights of Ludwig von Mises and Frédéric Bastiat, tariffs are rarely successful in achieving their stated aims. Instead, they generate unseen but profound costs, hidden disruptions, and massive economic dislocations due to the inherent heterogeneity and specificity of capital goods involved.

Charles Johnson, President & CEO of the Aluminum Association, recently provided illuminating examples from the aluminum industry that exemplify precisely these insights. Johnson pointed out the dramatic decline in US aluminum smelting facilities—from 30 smelters a few decades ago to only four today. Tariffs, the Trump administration argues, will incentivize reshoring of aluminum production. But Johnson’s insights vividly illustrate why tariffs not only fail to achieve their intended goal but often exacerbate underlying problems………

Mises’s concept of economic intervention is clear here: interventions rarely accomplish their intended goals without generating unintended consequences. Tariffs, while creating visible short-term “protection” (the seen), introduce massive hidden costs (the unseen), including prolonged production delays, disrupted supply chains, resource misallocation, and loss of competitiveness. Tariffs artificially redirect resources away from more productive uses, locking up capital in prolonged, uncertain investment cycles.

Bastiat’s “seen versus unseen” principle shines a bright light on this scenario. Policymakers might easily see immediate, tangible benefits from tariffs: domestic aluminum producers appear protected, some job announcements might follow, and headlines might proclaim economic patriotism. However, the unseen consequences—massive disruptions, long-term inefficiencies, and deep-rooted misallocations of capital—loom much larger. These unseen costs can ripple through the economy for decades, far outstripping short-term benefits.

From the Austrian economics perspective, the question becomes one of opportunity cost. Is diverting capital to build costly new smelters, reconfigure energy supply chains, and replicate infrastructure already efficiently provided by integrated North American networks truly the best use of scarce US resources? Or is this capital better allocated toward industries and innovations where resources are more flexibly and quickly deployable?