President Trump has lost no time asserting control over American trade policy, seemingly willing to levy tariffs on any partner at any time for any purpose.
He has threatened 25 percent tariffs on goods from Mexico and Canada, risking immediate disruption of the North American economy, and placed additional tariffs on imports from China, bringing tariffs on some Chinese goods to over 35 percent. On Monday, 25 percent tariffs on foreign steel and aluminum were announced.
To claim the authority to impose these new tariffs, Mr. Trump invoked the Trade Expansion Act and the International Emergency Economic Powers Act, two federal statutes that authorize the president to regulate international commerce during a national emergency or to address national security threats. In doing so, he sidestepped constitutional constraints on the executive branch to levy taxes without the consent of Congress.
But this was not simply a power grab. What Mr. Trump is doing with tariffs is a result of a lost consensus about how the United States should interact with other countries in the global economy. He is stepping into that vacuum, filling it with the unrestrained and autocratic use of import taxes, moves that appear to be based on personal whim rather than on U.S. trade law. Arbitrary trade policy of this kind reduces American influence abroad; harms working Americans, who often ultimately pay these import taxes; and makes the U.S. manufacturing sector less attractive to investors.
Since the passage of the Trade Act in 1974, Congress and the executive branch have, in effect, operated with the understanding that the president would be able to pursue a largely liberal trade policy to allow the free movement of goods and services between the United States and the rest of the world. Both parties recognized the value to national security of building and strengthening alliances through international commerce. Congress transferred its power to set trade policy to the executive branch in exchange for a commitment that these policies would cause no substantial injury to their constituents.
Rather than legislating tariffs line by line, Congress allowed for the president and his trade representatives to engage in negotiations over tariff levels and market access. Trade deals could be balanced with tariffs to offset economic injury caused by import surges, foreign subsidies and unfair competition.
Access to these protective tariffs was available to any company or group that met congressionally mandated tests for what constitutes unfair trade practices and the resulting injuries. Crucially, these rules limit protection to those who need it, while leveling access for all petitioners.
Leaders of both parties have played a part in the gradual erosion of the old consensus that underpinned this system. No significant global trade agreement has been ratified by Congress since Bill Clinton signed the Uruguay Round Agreements Act in 1994, the legislative foundation for U.S. membership in the World Trade Organization. While both parties have avoided the capricious use of tariffs to pursue unrelated policy goals or extract other concessions from trading partners, they have been willing to ratify only a few limited commercial treaties since then.
Congress and the executive branch, under both parties, have also tolerated the warping of the rules that regulate the granting of protective tariffs. Mr. Trump relies on dubious national security claims to place tariffs on steel and aluminum imports from close allies. In his first trade war with China, he used Section 301 of the Trade Act of 1974, which is meant to respond to unfair foreign trade practices that harm U.S. exports, to respond to claims of harms to American companies and workers by Chinese imports. President Joe Biden left these China tariffs in place and added new tariffs on additional imports under the same authority. In so doing, the United States has violated its commitment to fellow W.T.O. members.
Although both the first Trump administration and the Biden administration played fast and loose with the nation’s trade laws, at least they linked their actions to the economic goals for trade policy that are set forth in existing legislation. Ensuring open markets for American exports and protection from unfair practices are goals for which Congress clearly authorized the possible use of tariffs by the executive branch.
In its first month in office, however, the new Trump administration has set aside those norms, sending volleys of tariffs and tariff threats despite the predictable damage to Americans and to its trade partners. Congress has yet to push back. The executive branch alone now sets American trade policy, under the guise of national security, as Congress watches from the sidelines.
The dangers of a trade policy in which a president chooses targets and punishments at will are becoming increasingly clear. Economic coercion often works in the short run, but it slowly erodes one’s network of influence. Mr. Trump’s threats against Mexico and Canada displayed no concern for the terms of the United States-Mexico-Canada Act, a legally valid trade agreement signed by Mr. Trump himself; why would other nations want to enter into similar agreements?
By claiming tariffs as his preferred weapon, the president has chosen a powerful instrument to reward and harm not only foreign nations but also domestic interests. Tariffs create domestic winners (those who receive protection) and domestic losers (those who must pay higher prices).
Without a transparent, nonpartisan system to adjudicate claims for protection, corporations and states willing to pay for access can manipulate trade policy. This adds profound uncertainty for those doing business in or with the United States and for the millions of workers they employ. Many Americans welcome more investment in U.S. manufacturing and in depressed regions as the country seeks greater economic resilience and security, especially by decreasing our dependence on China. But arbitrary tariff policy makes such investment less attractive. Seeing Mr. Trump change his mind about which tariffs will go into effect and when might make a foreign company considering building a new factory in Michigan or Arizona think twice.
Over time, arbitrary trade policy will only inflict more damage on the American economy. America’s allies and friends will form new commercial ties, perhaps even deepening their economic integration with China.
Clearly, bipartisan congressional support for the postwar consensus — and even for Congress’s own responsible leadership of trade policy — is currently absent. We need a renewed framework for managing trade policy while limiting the ability of the executive branch to use tariffs as an all-purpose weapon. Congress has the constitutional and economic justification to create that framework.
No one gains from the instability and disruptions that erratic tariffs unleash, and the resulting chaos pulls attention away from finding ways to use trade policy in pursuit of a fairer, more resilient economy.
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