Trump’s Treasury secretary just admitted the tariff rationale is hogwash
Perhaps distracted by the beauty and billionaires of Davos, Switzerland, this week Treasury Secretary Steven Mnuchin let slip an embarrassing admission: President Trump’s justification for his trade wars is hogwash.
For two years, the administration has offered increasingly ludicrous explanations for its tariffs. Sometimes tariffs are designed to shield pet U.S. industries from unfair competition. (Those industries are still shuttering plants despite the tariffs, but no matter.) Sometimes, tariffs are instead intended to raise revenue from abroad. (That additional tax revenue is being paid by Americans, not foreigners, but whatever.)
Perhaps the most farcical rationale, however, has been that massive tariffs are necessary to safeguard America’s “national security.”
It’s true that Congress, in the Trade Expansion Act of 1962, authorized the president to impose tariffs when national security is at stake. Historically, presidents have invoked this authority regarding sensitive commodities, such as uranium and oil. The law’s language is pretty broad, though. That makes it ripe for mishandling by a president inclined to abuse it.
And this one certainly is. First, the Trump administration argued that it needed to impose worldwide tariffs on steel and aluminum on these bogus “national security” grounds. After all, Trump explained, “If you don’t have steel, you don’t have a country,” whatever that means.
Loyal allies, such as Canada and Britain, were understandably offended to learn that their metal products somehow threatened U.S. national security and would thus be tariffed.
Despite this transparent abuse of the law, Congress did little to stand in Trump’s way. And so he invoked the law again, this time against cars.
Last year, at Trump’s request, the Commerce Department produced a report determining that imports of autos and automotive parts somehow also put America at grave risk, and that it thereby needs to do something to increase “American-owned” production.
Precisely how your Subaru or Honda, or some foreign-made part buried somewhere in your Ford, compromises U.S. security is unclear; that Commerce Department report has never been released.
So far the Trump administration has not actually levied any auto tariffs. Whether it still retains the authority to do so under that 1962 law — which included some deadlines that may already have passed — remains in dispute.
At a Davos panel Wednesday, Mnuchin finally acknowledged the obvious: that the administration’s official rationale for auto tariffs was made up, a legal fiction designed to let it bully or retaliate against opponents whenever Trump felt like it.
In the context of a discussion about digital service taxes proposed by European countries, Mnuchin told the audience: “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies.”
Last month, as part of its new spending bill, Congress inserted a provision requiring the White House to turn over that long-secret Commerce Department report on the national security threat posed by auto imports. The administration is refusing. It argues that, among other things, the report is covered by “executive privilege.”
This is despite the fact that it had no problem releasing earlier Commerce Department reports justifying metal tariffs on the same silly grounds.
Presumably the administration knows its case is embarrassingly thin.
But that’s no excuse for hiding its homework. Auto companies and millions of American workers are being threatened with punishment for supposedly jeopardizing U.S. national security, and they have a right to see the accusations against them.
Then again, it appears Mnuchin has just given us, and them, a useful CliffsNotes version of the report: It’s all just arbitrary.