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Tuesday, June 5, 2018
"National Security" Tariffs Run Amok:
Congress Needs To Rein in Section 232 
Over the past several months, the Trump administration has harmed U.S. businesses and consumers with its tariffs on steel and aluminum, which now apply even to close allies such as Canada, the EU, and Mexico. The justification for these tariffs is "national security," but the Department of Defense itself doesn't accept this rationale. Shockingly, the administration is now talking about putting tariffs on automobile imports on the same basis. Perhaps the old, exploding Ford Pinto could be a security threat, if a U.S. combat vehicle ran into one, but the idea that Honda Civics are somehow endangering America's security defies logic.
The Trump administration is now showing its true colors on trade, so appealing for more reasonable behavior on these matters is probably a lost cause. But there is one other place to turn for help: Congress has delegated some of its power over trade to the president, and it's now time to take some of that power back.
The president's authority to impose tariffs on the basis of national security comes from Section 232 of the Trade Expansion Act of 1962. It is reasonable to have a statute that allows a president to impose restrictions on imports that threaten national security. For example, during World War II, we might not feel safe relying on imports of German guns to supply our military, and restrictions would therefore be appropriate.
But Section 232, as written, goes too far and can be abused. Senator Mike Lee has proposed the Global Trade Accountability Act, which would require the president to secure a joint resolution of both houses of Congress before any unilateral trade action could take effect. That's a good start, but other changes could be helpful as well.
The statute refers to "the close relation of the economic welfare of the Nation to our national security," and "the impact of foreign competition on the economic welfare of individual domestic industries." In the hands of a president who believes that imports harm the economy, this provision can be a dangerous weapon. A number of other statutes designed to examine the impact of imports on domestic industries already exist; Section 232 does not need to duplicate that effort, and this language should be removed.
In addition, while it should have been obvious that imports from countries which have signed defense treaties with the United States do not threaten our national security (in fact, they help protect it), the Trump administration has taken a different view and imposed tariffs on key allies. The statute should be clarified so as to exclude these countries from being targets of Section 232.
In the face of protectionist threats and actions by the Trump administration, Congress has not shown much backbone on trade so far. However, by imposing steel and aluminum tariffs on Canada, the EU, and Mexico, the administration has ratcheted things up to the next level of trade confrontation. The time has come for Congress to act.

-by Simon Lester
Our Scholars on Recent Trade Policy Developments
That Congress sits by idly as President Trump misappropriates his authorities to disrupt global supply chains, inflict pain on U.S. trade partners, generate enormous amounts of domestic collateral damage, and make the United States an international scofflaw, is a dereliction of duty arguably unrivaled since it rubber-stamped the 2003 Iraq invasion.  As with the Iraq decision, the costs of Trump’s trade aggressions will be significant and enduring.

(More from Dan.)
Simon Lester:
The Trump administration's efforts to negotiate a better trade relationship with China continue to go nowhere. Commerce Secretary Wilbur Ross just returned from China, in what was the the third high-level meeting on these issues in recent weeks, but had nothing to show for it. The main problem is the administration's approach, which seems to be based on the managed trade idea that the Chinese government should order a shift in purchasing from other countries' goods to U.S. goods. What the Trump administration should be doing instead is engaging in a real trade liberalizing negotiation with China.

(More from Simon.)
Colin Grabow:
May was a heck of a month. Between the imposition of steel and aluminum tariffs on U.S. allies, apparent renewed U.S. demand that a revised NAFTA include a five year sunset provision, a trade war with China that increasingly appears to have a rendezvous with destiny, and the launch of an investigation into the national security implications of auto imports, the Trump administration’s trade policy has completely gone off the rails. It’s time for Congress to apply some adult supervision. Critical remarks and tweets are welcome, but what’s really needed is action. Bipartisan legislation along the lines of Sen. Mike Lee’s Global Trade Accountability Act needs to be passed that would allow Congress to check an executive branch run amok.  
(More from Colin.)
Inu Manak:
With the imposition of the Section 232 tariffs on steel and aluminum from Canada, Mexico, and the European Union, the United States veers into new territory by treating its allies as a threat to national security. Canada, Mexico, and the EU responded swiftly with their own retaliatory tariffs, which will undoubtedly be felt by U.S. businesses and consumers. It is not clear what the administration’s strategy is in taking this action, or whether there is a strategy at all. If the idea is to pressure our closest trading partners to negotiate, imposing tariffs may do just the opposite. In fact, NAFTA talks have stalled and it appears that the possibility of a new deal this year is largely out of sight. In addition, the EU is unlikely to be bullied into restarting the TTIP talks. In the end, the United States continues to isolate itself with a trade policy that is becoming more out of step with other developed countries' policies. Unfortunately, it is U.S. consumers and businesses that will have to foot the bill for these irresponsible actions.

(More from Inu.)
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