Will Congress Rein in Tariff Abuse?

President Donald Trump speaks about trade at the Granite City Works steel coil warehouse in Granite City, Ill., July 26, 2018. (Joshua Roberts/Reuters)
National security is a flimsy rationale for destructive trade restrictions.

NRPLUS MEMBER ARTICLE L ast week, the Supreme Court declined to hear arguments in a case filed by American steel importers challenging the constitutionality of the Trump administration’s 25 percent tariffs on foreign steel. While the decision is no doubt disappointing for the estimated 6.5 million Americans employed in steel-consuming industries, it should also serve as a wake-up call for a Congress that has so far been unable to rein in tariff abuse.

To be clear, broad executive-branch misuse of so-called national-security tariffs contravenes legislative intent and sets a dangerous precedent under which unilateral trade restrictions can be explained away with flimsy national-security rationales.

But there is much more at stake here than the constitutional question of whether Congress can delegate such tariff powers to the president. Unchecked by Congress and now the Supreme Court, the administration’s tariffs on steel and aluminum have helped to entrench protectionist industrial policies, divided the president’s own party about their value to the economy, ignited fierce turf wars and lobbying battles, and left economic uncertainty and lost jobs in their wake.

Past White Houses have practiced restraint with the tariff authority under “Section 232” — shorthand for a 1962 trade law that allows the president to impose trade restrictions if the Commerce Department finds that certain imports threaten national security. Prior to the current administration, the last time a U.S. president took action under Section 232 was in 1986, when President Reagan used the law to negotiate export-restraint agreements with foreign machine-tool manufacturers.

The Trump administration, however, appears to have dusted off Section 232 to suit the president’s political aims, opening an unprecedented eight new Section 232 investigations since 2017. Considered as a whole, these actions point to a troubling conclusion: An outdated, Cold War–era statute designed to protect the national defense has been slowly and steadily repurposed as a unilateral tool for industrial policymaking.

The White House is alone in this fight. When the administration announced global tariffs of 25 percent on steel and 10 percent on aluminum in March 2018, they were met with swift domestic and international backlash — even then-Defense secretary James Mattis disagreed with the national-security rationale. Allies and trading partners retaliated against U.S. exports, and domestic importers filed well over 100,000 tariff-exemption requests. The Peterson Institute estimated that for each job created or saved by the tariff, the cost to Americans would be $900,000. But the president has been loath to rescind any of these tariffs, even after supposedly using them as leverage to renegotiate trade agreements with Canada, Mexico, and South Korea. In fact, the tariffs on Canada and Mexico were removed only after Senate Finance Committee chairman Chuck Grassley penned an op-ed in the Wall Street Journal declaring, as the headline put it, “Trump’s Tariffs End, or His Trade Deal Dies.” Tellingly, with the U.S.–Mexico–Canada Agreement now safely through Congress, the administration is publicly contemplating re-imposing steel and aluminum tariffs on Canada.

But the Section 232 drama hardly ends with steel and aluminum, or even with the Commerce Department’s outrageous finding that imports of automobile parts and cars threaten national security — a finding so nonsensical, apparently, that the White House has failed to respond to a FOIA request brought by the Cause of Action Institute to disclose Commerce’s report, even though Congress passed a law to compel publication of the report.

Lost in the noise of the U.S.–China trade war, the Commerce Department opened three new Section 232 investigations in less than a month targeting imports of vanadium (an element used in some metal alloys), mobile cranes, and grain-oriented electrical steel (a type of steel commonly used in power distribution transformers). These new investigations came on the heels of Commerce Department investigations in two Section 232 cases involving uranium and titanium sponge (an intermediate input in titanium manufacturing); Commerce found in these instances that the imports were threatening national security, but, thankfully, the president declined to impose tariffs in both cases.

The White House has also attempted to impose more tariffs on steel and aluminum by amending the president’s original March 2018 proclamations. Most recently, in January, the White House announced that the steel and aluminum Section 232 tariffs would also apply to $479 million worth of new “derivative” products containing high amounts of steel or aluminum, such as nails, wires, and automotive bumpers.

In a telling episode at the Court of International Trade this month, a Trump administration lawyer was asked if he could conceive of a modification to a prior Section 232 tariff that would be “so large” as to require a new investigation by the Commerce Department in order to authorize it. The attorney conceded that Section 232 did not have such limits: “The answer is no, not today and the answer is most likely no . . . the supervision would have to come from Congress.”

Supervision from Congress indeed. Unless Congress wants to see new pressures on the economy from destructive tariff policies and even more job uncertainty for Americans in the middle of a pandemic, it needs to reassert its authority over trade.

Halie Craig is an associate fellow for international trade and investment policy at the R Street Institute. Clark Packard is a resident fellow and trade-policy counsel at the R Street Institute.

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