After a roller coaster month, it seems clearer than ever that President Donald Trump has lost control of the trade war—and as Congress returns to session, it seems more obvious than ever that it should take action to limit his ability to wage it.
Consider all that's happened since August 1, when Trump announced plans to impose new tariffs on Chinese imports. That announcement—the first major escalation of the trade war since last year—was made via Twitter and without first alerting Chinese trade officials. China retaliated. The stock market dropped, and fears of a recession grew. Trump decided to postpone some of the new tariffs to avoid socking consumers during the holiday shopping season, even as top White House advisors deny the obvious fact that tariffs are taxes on Americans. Trump suggested he might have to bail out Apple due to losses created by the trade war. Trump "hereby ordered" American companies to stop doing business in China. And, most recently, Trump lied about Chinese officials calling him to make a deal.
And now we're just two days away from what amounts to an $11.5 billion tax increase, when the 15 percent tariffs planned for September 1 take effect.
It's not hard to figure out why businesses are cutting back on investments amid the rollicking uncertainty created by the trade war. We're way past "good, and easy to win."
"When it comes to trade policy, the Trump administration is in a hole that it keeps digging deeper," says Bryan Riley, director of the National Taxpayers Union Foundation's free trade initiative.
For a little while about two weeks ago, it looked like Trump might stop digging. In the wake of bad news from the stock and bond markets, the president seemed to be reconsidering his long-held belief in the power of tariffs to get what he wants. But it didn't last. Now he seems to have settled on blaming the Federal Reserve for the large-scale issues like slowing growth, while bizarrely blaming the very businesses struggling under the weight of his tariffs for the problems he's caused.
If the Fed would cut, we would have one of the biggest Stock Market increases in a long time. Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management…and who can really blame them for doing that? Excuses! — Donald J. Trump (@realDonaldTrump) August 30, 2019
Trump is who he is. There's little reason to expect him to change course or admit he was wrong. That's why the task must fall to Congress. Even if it has only limited ability to roll back the tariffs Trump has already imposed, it could take important steps this fall to reduce his capacity to do more damage.
Senate Finance Committee Chairman Chuck Grassley (R–Iowa) will be the key player. His staff has alerted committee members to be prepared for a mark-up process, one of the first steps in approving legislation, shortly after the Senate returns from summer recess on September 9.
That process will seek to reconcile two competing bipartisan bills that share the goal of restricting the executive's authority to impose tariffs. One of those bills is the Bicameral Congressional Trade Authority Act, sponsored by Sens. Pat Toomey (R–Penn.) and Mark Warner (D–Va.). It would give Congress the ability to block future tariffs imposed under Section 232 of the Trade Expansion Act of 1962, the law Trump invoked to impose trade barriers on steel and aluminum imports last year and which he has threatened to use against imported automobiles.
As currently written, the law effectively gives presidents carte blanche to impose tariffs for reasons of "national security"—even if the security angle is extremely tenuous. It's a loophole Trump has exploited, and some Republicans are privately worried that a future Democratic administration could follow in his footsteps and declare that tariffs are necessary to combat, say, global warming.
Toomey's bill would limit the definition of "national security" in the law, and it would require the Pentagon to sign off on the declaration—as opposed to the Commerce Department, which handles it now. Congress would have 60 days to review and vote on any proposed Section 232 tariffs.
The other bill is Trade Security Act, sponsored by Sens. Rob Portman (R–Ohio) and Doug Jones (D–Ala.). It too would transfer the Section 232 process from the Commerce Department to the Pentagon, and it would add a mechanism to allow Congress to block presidential tariff declarations. The Portman/Jones bill would require Congress to pass a resolution disapproving of a tariff in order to revoke it, while Toomey's bill would require congressional assent before tariffs could be imposed—essentially forcing Congress to be part of the discussion, and removing the possibility that a do-nothing Congress would allow a president to act unilaterally.
While the specifics differ, the fact that both bills will be up for debate in the Finance Committee next month is a signal that lawmakers on both sides of the aisle distrust Trump's ability to use his tariff powers prudently.
Another important aspect of the debate will involve the United States-Mexico-Canada Agreement (USMCA), the Trump administration's rewrite of the North American Free Trade Agreement. Congress must approve the new trade deal before it becomes official, and any action to limit presidential tariff authority could be linked—either implicitly or explicitly—to the USMCA as a way to prevent Trump from vetoing the Section 232 reforms.
Neither of the two bills likely to be considered by the Finance Committee would have an impact on the tariffs that will hit on September 1. Those new import taxes, like the earlier tariffs on Chinese goods, are authorized under a different law: Section 301 of the Trade Act of 1974. That law requires approval by the Office of the U.S. Trade Representative, rather than the "national security" rationalization, but it is part of the same decadeslong trend of Congress handing over trade authority to the presidency.
As the trade war ramps up again, there's a least a faint hope that Congress will try to stand up to stop it.
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