Congress Cannot Be a Tariff Bystander - Gary Sasse

Congress Cannot Be a Tariff Bystander - Gary Sasse

President Trump believes “unfair” tariffs have economically disadvantaged American businesses and workers. In some instances, he may be correct.

 

Yesterday, President Trump announced an omnibus tariff program that includes a 10 percent universal tariff with some exceptions for semiconductors, pharmaceuticals, and critical minerals. Additional tariffs are also targeted at specific nations based on so-called trade barriers they place on American exports, and a 25 percent tariff is levied on foreign-made autos. Included is an additional 34 percent tariff on China, 20 percent on the EU, and 24 and 26 percent, respectively, on Japan and India. Currently, it is difficult to predict if the President’s plan will ratchet up a global trade war. While details are sketchy and modifications are possible, decades of global trade practices are being capsized.

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Trump’s tariff policies have engendered debate among economists, business leaders and policymakers about their potential impact on America’s economic well-being. Critics vigorously argue that the Trump tariffs will lead to higher consumer prices and a new round of inflation. Others believe that the President’s chaotic announcements have negatively impacted business confidence. Look no further than the stock market.

 

While tariffs are intended to stimulate investments in domestic manufacturing, it is uncertain what impact they could have on export-driven manufacturing, supply chains, and time requirements to operationalize new manufacturing facilities.

 

What is clear about the tariff debate is decisions are being made unilaterally by the President. Our system of checks and balances is moribund. No Labels, an organization promoting centrism and bipartisanship, has asked the following question. “Why is Congress a bystander as the President imposes the most changes to trade and tariffs in decades?” The answer is that Congress has chosen to abdicate its constitutional responsibility.

 

Article I, Section 8 of the United States Constitution explicitly grants Congress the power “to levy and collect Taxes, Duties, Imposts, and Excises”. Tariffs specifically fall under the category of “Duties and Imposts.” The intent of this Article was for Congress to have the power to regulate trade, generate revenue, and protect domestic industries. One of the first laws enacted by Congress was The Tariff Act of 1789.

 

A policy brief prepared by No Labels outlined the history of Congress voluntarily delegating its authority over tariffs to the executive. This delegation can be traced to the New Deal’s Reciprocal Trade Agreement Act of 1934. This law basically permitted the President to raise or lower tariff rates without congressional approval.

 

Under President Kennedy the Trade Expansion Act of 1962 gave the chief executive the ability to reduce tariffs without legislative approval, as well as impose new tariffs on imports that threatened national security.

 

The Trade Act of 1974 allowed the President to raise tariffs in response to unfair trade practices. In 1977, the International Emergency Economic Powers Act permitted the chief executive to impose tariffs related to national emergencies.

 

It is likely that President Trump may cite these laws as he imposes historic changes to trade policy. It is ironic that a President’s actions can threaten a trade war without congressional input.  So, what should Congress do, if anything, to reimpose its Article I constitutional prerogatives, and function as a coequal branch of government? As Congressman Don Bacon (R-NE) said, it was a “mistake” to let Presidents have so much flexibility and authority to set tariff policy.

 

Bottomline, Congress should take steps to restore its oversight over executive tariff decisions. Congressman Josh Gottheimer (D-NJ) has introduced the Reclaiming Congressional Trade Authority Act, which requires presidents to justify their tariff changes to Congress before exercising emergency powers. As No Labels noted, “it could go a long way toward restoring the Constitution’s vision on trade.”

 

Gary Sasse served as Director of the Rhode Island Departments of Administration and Revenue and President of RIPEC.