Trade barriers are an obvious #NeverNeeded candidate for removal during a pandemic and a recession. They make medical supplies scarcer and more expensive. They raise consumer prices at a time when millions of people are losing their jobs and wondering how to make ends meet. And because other countries retaliate every time President Trump raises a tariff, U.S. businesses find shrunken markets for their goods through no fault of their own. Tariffs are a self-harming policy. They must go.
In a new paper for CEI’s #NeverNeeded series, I lay out a plan for making that happen. But simply getting rid of the Trump-era tariffs is not enough. Reformers need to make sure they do not come back. That means, as with so many areas, that institution-level reform is necessary. In this case, that reform involves the separation of powers.
The backstory is that Congress originally delegated away some of its tariff-making power in the 1960s and 1970s to the president because it found itself incapable of reducing tariffs the way it wanted to in the early postwar era. Vote-trading and favor exchanges that are a common part of congressional operating procedure weakened trade liberalization attempts. The thinking was that the president, with a national constituency, would be less prone to giving narrow favors to a single congressional district at the expense of the whole country.
This worked until an ideologically protectionist White House more than doubled U.S. tariff rates in just three years. Those tariffs and the retaliations they inspired are costing roughly a half percentage point of growth. The country might be able afford this kind of ideological luxury good during a boom, but not during COVID.
The tariffs must go, and Congress must reclaim its authority. Fortunately, the reform is pretty simple. Congress can repeal three sections from two different trade bills to reclaim its proper taxing authority from an executive branch that will not use it responsibly.
Those sections are Section 232 of the Trade Expansion Act of 1962 and Sections 201 and 301 of the Trade Act of 1974.
The whole paper is here.
A broader agenda for reducing trade barriers is in Iain Murray’s and my paper Traders of the Lost Ark.
CEI’s #NeverNeeded website is here.