President Trump has announced a plan to slap 25% tariffs on steel and 10% on aluminum. The move is not surprising. One of Trump’s reasons for running for President was the premise that the country had been cheated on trade. America, he claimed, had been taken advantage of and sold down the river by politicians who agreed to various free trade deals.
Trump’s plan, simply put, is bad. Trade wars are never beneficial to the economy. Further, the justification that we need a 25% tax on steel for national security reasons is an insult to our intelligence.
Beyond the economic reasons, however, there are both constitutional and diplomatic reasons showing why Trump’s tariff plan is wrongheaded.
The Plan is Unconstitutional
Section 201 of the Trade Act of 1974 allows for the government to place temporary “safeguard actions” in place to protect domestic industries. Section 338 of the Tariff Act of 1930 gives the President broad authority to raise tariffs to block trade from another country that the President has determined has unfairly affected commerce with the United States.
Both these laws have been on the books for decades. However, that does not mean the President has the power to raise taxes unilaterally. Under our Constitution, it is supposed to be Congress that regulates commerce with foreign nations. That Commerce Clause that we spent so much time getting worked up about under Obama applies to Trump as well.
Congress has for decades delegated vast amounts of power to the executive branch and now it may finally come back to haunt them as the President has threatened trade war. If Congress wants to advert a trade war, it should work up the courage to take back its power. It cannot continue passing responsibility off to the Executive and then washing its hands of any negative consequences.
The Tariffs Harm Foreign Relations
Trump, by vowing to “renegotiate” every single trade deal, ignores the historical context in which these trade deals were signed. Most notably, Trump has threatened to send NAFTA to the shredder unless Canada and Mexico renegotiate the deal.
The history of how these deals came about may not be the most exciting thing to talk about, but it is crucial. Understanding their historical context highlights just how important they are. Despite what Trump says, these are mutually beneficial trade deals, and matter when talking about American commitment and credibility abroad.
Today, free trade with Canada makes as much as sense as saying 2+2=4. However, it was not always certain that the world’s largest peaceful border would be what it is today. The free trade agreement with Canada that set the stage for NAFTA took almost 80 years to come to fruition.
Further, when it finally did, then-Canadian Prime Minister Brian Mulroney risked his political career to push it through. Mulroney called for national elections over the free trade deal he reached with Ronald Reagan. Mulroney had his patriotism challenged by John Turner, and was accused of selling out Canada to the United States and reversing over 100 years of precedent.
When Mexico came along to join the US and Canada, free trade was an inflammatory topic in Mexico. The introduction of American agriculture to the Mexican market was a change in decades of protectionist policies. Even today, anti-free traders on the hard left say that NAFTA destroyed Mexico–despite Mexico being much better economically today than it was pre-NAFTA.
The Plan’s Inherent Irony
Ironically, Canada and Mexico have done so well because of NAFTA that their success is the evidence Trump gives when saying they have been “beating” us in trade. Trump has threatened to destroy decades of contemporary progress in pursuit of an economic policy from the 15th century.
Plenty of people have written on why Trump’s plan is bad economically, and that is important to this debate. However, the economy is not the only thing that matters when public policy is being considered. Trump’s trade policy will have serious constitutional and foreign policy consequences, as well.