Matthew Lynn, a Post Opinions contributor, is a financial columnist and author who writes for the Daily Telegraph and the Spectator in London.
Tariffs are to stop fentanyl smuggling. Or to weather an economic emergency, or to stop modern slavery, or to combat unfair trade, or to stick it to a country that forgot to send the president a birthday gift. Okay, I made that last one up. But the United States has used all the others at some point in the past two years as excuses to impose levies on its trading partners. The strategy is crazy.
Reasonable people can debate whether import levies are good or bad for the economy. But if the U.S. is going to have tariffs, it needs a clear legal framework for how to implement them — otherwise the country is left with a chaotic mess.
Ever since the oddly named “Liberation Day” 18 months ago ripped up the global trading system, the White House has come up with a bewildering parade of legal instruments for imposing tariffs. I recommend plenty of strong coffee for anyone trying to follow them all (preferably from Hawaii-grown coffee beans, just in case President Donald Trump imposes a levy on the imported stuff).
Here goes. The first round was imposed using the International Emergency Economic Powers Act, a piece of legislation from 1977, on the grounds that the trade deficit constituted an “unusual and extraordinary threat to the national security and economy of the United States.” Really? The U.S. hasn’t run a trade surplus since 1975, and the sky hasn’t fallen. If you weren’t convinced by that, apparently fentanyl smuggling from Canada was an “emergency” as well. It was no great surprise to anyone that the Supreme Court eventually ruled that the claim to nearly unlimited tariff authority was, to use the technical term, completely wacko.
Undaunted, the Trump administration switched tack, using Section 122 of the Trade Act of 1974 to impose 10 percent universal tariffs instead. Next, it tried tariffs based on Section 301 of the same law, imposing levies on countries that had ostensibly not cracked down on “forced labor,” including places such as Britain and Australia. And the latest tariffs on Canada were imposed via the 1930 Tariff Act on the grounds that America’s northern neighbor was “discriminating” against U.S. products.
The list goes on. The Trump administration’s grab bag of explanations has put Congress in a bizarre position. Almost any piece of legislation before Congress is likely to get held up because someone in the White House will seize subclause 202(ii) and shout, “Eureka, we now have the authority to slap 50 percent tariffs on blueberries from Peru.”
Everyone knows the game being played here. The president was elected on a promise to impose tariffs on much of the rest of the world. He knows that he doesn’t have much chance of getting Congress to comply, so he is using whatever ancient piece of legislation he can find to impose the levies himself. That might work for a year or two, but it is no basis for long-term policymaking.
Whether tariffs are a good idea is a separate issue. Like any tax, they distort trade — and the world economy would be better off without them. That said, the levies have not collapsed the global trading system, despite the dire warnings economists had made about Liberation Day, and they have raised significant amounts of money for the U.S. In reality, the U.S. had become an outlier in its commitment to completely free trade, with even such exemplars of the “rules-based order” as the European Union imposing plenty of tariffs.
But if a country is going to use tariffs — and it looks like they will be around for a while — there should be a clear legal structure and a competent body to design them. American tariffs are traditionally set by Congress. But that hardly makes sense in the modern world, where levies are often highly specialized and technical. It is hard to get 500-plus politicians to agree on anything, never mind what tariff to impose on a spare part for an HVAC unit shipped from Vietnam.
It would be far better if there were a new law that gave the president the power to set tariffs, up to prescribed limits, with oversight by Congress. Of course, there is not much chance of any bipartisan agreement on that, at least not while Trump is president. The debate has been far too politicized, and the administration has not been able to come up with a convincing case for tariffs. But it would still be the best outcome for the nation — and it would rescue Americans from the chaos of the past two years.
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