Tariffs can help revitalise US mineral production: a case study of tungsten
In Mining Journal, I explore how tariffs helped revitalize US tungsten mining in the 1920s, amid low prices caused by China’s huge production of cheap tungsten ore. Today, Chinese firms’ production has similarly caused low prices for minerals like cobalt and nickel.
Full article: https://www.mining-journal.com/mj-comment/opinion/4351074/op-ed-tariffs-help-revitalize-us-mineral-production-case-study-tungsten
“In 1918, the United States was the second largest producer of tungsten ore after China….After World War I, however, tungsten prices fell, including below the cost of production for many US mines….The US Geological Survey attributed the price collapse to ‘the large imports of the very cheap and rich ore from China.’”
“The resulting price conditions made US mining of tungsten—even high-grade deposits—cost-prohibitive….US tungsten mining shut down in 1921 and remained shut down in 1922. China continued to mine and export cheap tungsten ore, and imports of tungsten ore continued to enter the US.”
“Yet, calls for tariffs…led Congress…to impose a duty of 45 cents per pound on tungsten contained in ore, effective September 22, 1922. All imports of tungsten ore and concentrates stopped when the tariffs took effect, and they remained stopped until 1925.”
“US tungsten mining restarted in 1923, the year after the tariff imposition, and gradually increased to pre-World War I levels by 1925. The US Bureau of Mines noted that US tungsten production was only possible with tariff support, given China's continued tungsten production amid low prices.”
To increase US mineral production, the US government today should impose tariffs on minerals with domestic reserves: “If sufficiently high, tariffs can incentivise domestic mineral production by increasing the price of imported minerals, which increases the price competitiveness and thus the demand for domestically produced minerals.”