Presidential Power to Impose Tariffs: Does it Make Sense?

Over the last few months, President Donald Trump has begun to enact tariffs on a number of goods imported from Europe, Asia, and other North American nations. He first began applying tariffs on steel and aluminum on March 1, 2018. Many U.S. companies have complained that the tariffs have hurt or will hurt their businesses, while other companies have applauded the tariffs as a win for laborers. Regardless of people's opinions on the issue, an important question remains: Why does the President have the power to impose tariffs?

According to the Congressional Research Service, before the 1930s, “Congress itself usually set tariff rates for imported products.” The U.S. Constitution provided Congress with the power to regulate commerce, per the Commerce Clause in Article I, Section 8,  that gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” According to Article II, Section 3, the President “shall receive ambassadors and other public ministers.” Nothing else in Article II mentions the President’s power regarding foreign affairs, much less trade with foreign nations. Over time, Congress delegated the power to impose tariffs to the President. In a challenge to the delegation of powers, J. W. Hampton, Jr. & Company sued the federal government after the Fordney-McCumber Tariff Act of 1922 allowed the President to raise tariffs that affected the firm. In a unanimous decision, the Supreme Court ruled that in the J. W. Hampton, Jr. & Co. v. United States case that the Congress did have the right to hand over powers to the Executive under “defined limits.”

President Trump’s use of tariffs is based on Section 232 of the Trade Expansion Act of 1962, which provided that the President has the ability to impose trade restrictions if the Department of Commerce finds that the trade imposes a threat to national security. Many people criticize the “national security blanket” for its vagueness, and even Congress has proposed bills to amend the Trade Expansion Act of 1962 to require Congressional approval for any of these “national security” actions. Senator Bob Corker (R-TN) and Representative Mike Gallagher (R-WI08) introduced related bills, S.3013 and H.R.6337, to put the trade power back into the hands of Congress, although neither House and Senate Leadership nor the committees each bill was sent to have acted upon them.

While it may make sense for the President to have some leeway to impose tariffs in order to protect national security, especially as his role as Commander-in-Chief, matters of trade are best left to those who understand the local and regional effects of it, which are members of Congress. On July 24, 2018, The U.S. House of Representatives Ways and Means Committee Subcommittee on Trade held a hearing on the exclusion process for Section 232 tariffs on steel and aluminum. In the hearing, Subcommittee Chairman Rep. David Reichert (R-WA08) pointed out that under the President’s process to impose tariffs, the Department of Commerce has the ability to screen companies and nations to exempt them from tariffs. The Chairman also mentioned that the process is slow, inefficient, and essentially picks winners and losers in the economy. Out of 27,000 Section 232 exclusion requests, the Department of Commerce had only processed 700 requests as of July 24, 2018, approving of only 266. Some of the companies who testified in the hearing complained that the exclusion process is long, lacks transparency, and does not clarify a reason why requests are denied. While companies are willing to buy products from domestic manufacturers, in many cases, no one in the U.S. can produce the capital inputs for manufacturer’s goods. Paying the tariff cost to import a product unavailable to a manufacturer does not help save U.S. jobs in some cases, but instead, hurts businesses in the U.S. These obscure but surprisingly frequent situations are not often looked at by the President when he makes decisions regarding imposing tariffs. Members of Congress, on the other hand, are directly affected, will receive complaints, and will understand their constituents’ difficulties.

Congress clearly did not take into account the consequences of delegating trade powers to the President. While Congressmen understandably seek to protect their seats by shifting any possible blame for issues onto the President,  they should still take into account the economic and international relations effects of such actions. The President’s ability to pick winners and losers and begin trade wars should be concerning to every American and especially to the Congress, who originally gave the President this power. It is pleasant to see, however, that Congress has begun to wake up to the fact that it can no longer hand over more and more power to the executive branch. The legislative actions Senator Corker and Rep. Gallagher proposed are certainly a step in the right direction for Congress to take back its rightful, constitutional power of regulating trade. If Congress still wants to allow the President to act as a delegate to impose tariffs for reasons of national security, it should attempt to clarify the language of the laws at hand or rewrite the legislation entirely. Regardless of the action taken, Congress will need to bring power back into its own hands, take responsibility for its actions, and legislate accordingly if it seeks a brighter, freer, and more opportunistic future for America.