Our friends over at the Cato Institute are known for their excellent free-market analysis, in particular on hot button issues like trade. They recently released a great short video to drive home the actual incidence of bad policy: “How Does the Trade War Hurt You?”
The video briskly makes the essential point that regardless of the effects on other nations, U.S. tariffs on imported goods hurt Americans as consumers, workers, and taxpayers. Prices go up for consumer goods, businesses are less likely to hire and raise wages, and we all have to pay for the agricultural subsidies that the current administration has extended to offset reduced export demand.
Fortunately, there is a solution. The current authority the executive branch is wielding to impose tariffs isn’t a natural part of our constitutional system of government. Enhanced power over trade was granted to the president by Congress in the 1960s and 70s, and it can be recalled just as easily. In the 2018 study “Traders of the Last Ark: Rediscovering a Moral and Economic Case for Free Trade,” my colleagues Iain Murray and Ryan Young lay out the necessary next moves:
Congress should repeal Section 232 of the Trade Expansion Act of 1962 and Sections 201 and 301 of the Trade Act of 1974. These legislative provisions give the president the power to raise tariffs unilaterally by citing national security concerns or unfair trade practices. Power of the purse, including raising revenue through tariffs, properly belongs with Congress, not the executive branch.