Trade act could stop tariff damage to U.S.
The Trump administration has used the threat and imposition of tariffs as a favorite tool to navigate when dealing with trading partners such as China, Mexico, and Canada.
U.S.-imposed tariffs caused these countries to retaliate with their own tariffs on American imported goods. In the middle are the millions of consumers and companies in each country that ultimately pay for the tariffs out of their own pockets in the form of higher-priced goods.
Section 232 of the U.S. Trade Expansion Act of 1962 was passed to allow U.S. presidents the ability to impose unlimited tariffs, based on a recommendation by the U.S. Secretary of Commerce, if “an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security.” Before the Trump Administration took office, the Commerce Department, invoking Section 232, had generated 16 investigations of imports that were suspected of impinging on national security. Of these investigations, very rarely did commerce deem that specific imports were impairing national security, and tariffs or a complete embargo of the imports were implemented. The Act was implemented in 1979 and 1982 against crude oil imports from Iran and Libya.
Therefore, Section 232 has been used carefully and sparingly, until Trump claimed in 2017 that steel and aluminum imports were hurting national security, and he imposed tariffs on imports of these products from China, Mexico,
and Canada. This action was heavily criticized by members of both the Democratic and Republican parties, who argued that the Act was being used as a farce to engage in a trade war with these countries, and as a way to conduct policy, when no actual threat existed to national security. Close diplomatic and trade allies like Canada and Mexico also strongly protested the imposition of tariffs under the guise of national security. Canada went as far as to point out that, contrary to being a national threat to the U.S., Canadians had served and died alongside Americans in several wars in which they were strong allies.
Should a president have such a powerful tool to be able to impose tariffs as he/she sees fit? Two Republicans, Sen. Mike Lee of Utah, and Rep. Warren Davidson of Ohio, don’t think so. Both have introduced in their respective chambers a bill titled, “the Global Trade Accountability Act (GTAA).” They have been vocal that Article I, Section 8 of the Constitution provides the Congress with the power to regulate commerce with other nations. The legislators also argue that during the past 100 years, the power with which Congress was vested pertaining to trade matters, taxes, duties, and tariffs has slowly been eroded and conceded to the executive branch. The GTAA is an attempt by Congress to take back its power, especially during these abnormal times of tariff impositions.
The GTAA would make unilateral actions by the president concerning trade barriers subject to approval by Congress. In this case, unilateral actions would be any increases in tariffs, duties, the tightening of tariff-rate quotas, or restrictions/prohibitions of imports. According to Lee’s comments on his website, “Congress has ceded far too much law-making power to the executive branch including the power to unilaterally raise tariffs. Sudden hikes in trade barriers could wreak havoc on many small and midsize manufacturers in my home state of Utah that rely on imports and globally-connected supply chains. Congress must be involved in any decision that would increase barriers to trade.” The bill would not cover any preference programs such as the General System of Preferences, Miscellaneous Tariff Bills, or technical corrections to the harmonized tariff schedule.
Response in favor of the GTAA’s passage has been strong, especially on the Republican side of the aisle. Conservative, libertarian, and anti-tax groups such as the Americans for Tax Reform, Freedomworks, the Center for a Free Economy, and Americans for Prosperity have all published editorials urging Congress to pass the GTAA to restore balance between the Executive and Legislative branches pertaining to trade matters.
Even with strong grassroots support, Skopos Labs, which has developed algorithms and artificial intelligence to track the viability of bills passing, only gives the GTAA a 3 percent chance of being enacted, most likely because for it to become law, the president would have to sign it. It is doubtful that Trump or any other president would sign a bill decreasing his/her powers in trade matters.
The bill is still in the first stage of the legislative process and might gain steam as it is debated and tweaked.
At this point rather than the GTAA being something that has a good chance of passing, it is more of a warning shot over the bow by congressional elements whose constituents have been hurt by the trade wars in which the Trump Administration has engaged, and who want to take their constitutionally-granted powers back.