Only Congress Can Fix American Trade |
In February, the U.S. Supreme Court struck down President Donald Trump’s sweeping “Liberation Day” tariffs. Among American commentators, the reaction was immediate and intense. “The Supreme Court dealt President Trump perhaps the biggest blow of his second term,” said the CNN host Fareed Zakaria. The New York Times columnist David French said the case “may prove to be the most important Supreme Court decision this century.”
These breathless responses are understandable. Trump had justified the tariffs with a staggeringly broad interpretation of the International Emergency Economic Powers Act, and the ruling was a check on his expansive theory of executive power and a setback for his agenda. It showed that the judiciary will not endlessly defer to his actions. But the case does not solve the underlying challenge facing U.S. trade policy. Trump’s use of the IEEPA may have been uniquely brash, but it did not emerge from a vacuum. Over the course of the twentieth century, the legislative branch has delegated many core trade functions to the executive branch, most notably through laws authorizing the president to negotiate trade agreements and unilaterally impose tariffs and import restrictions. And starting in the 1990s, Congress retreated from trade policy almost entirely. As a result, the laws governing presidential tariffs have not kept pace with dramatic shifts in the global economy. This divergence has led the executive branch to take actions on U.S. trade policy that are testing the patience of courts, creating friction with geopolitical partners, and wreaking havoc on global markets.
The Supreme Court’s ruling is unlikely to put an end to such decisions. In fact, Trump is already using other authorities to reimpose many of the tariffs that were just struck down. The reality is that neither the judiciary nor the executive branch can clean up this mess on its own. Instead, Congress must actively reclaim its constitutional role as the ultimate arbiter of American trade policy by overhauling legislation on tariffs. This means giving the president new, selective tariff powers to solve twenty-first-century challenges while paring back existing laws to prevent executive overreach and abuse. The goal should be to create a streamlined set of tariff authorities tailored for specific economic problems and tied to concrete, objective criteria for what is considered a national security threat—criteria dictated by Congress rather than presidential discretion. Without such reforms, the executive branch will continue to exercise de facto control over U.S. trade policy, with potentially grave implications for national security and the constitutional order.
In the decades after World War II, American trade policy was centered largely on protecting and expanding global commerce. U.S. officials struck trade deals with Washington’s allies and encouraged other countries to open their economies, as well. Even after Congress granted the executive branch greater tariff authority through the 1962 Trade Expansion Act and the 1974 Trade Act, presidents made sparing use of their powers. This restraint was partly a function of U.S. economic dominance during the earlier part of the Cold War, which reduced domestic political pressure to implement protectionist policies. But it also reflected a bipartisan preference for resolving trade tensions through diplomacy in order to avoid a recurrence of the tariff wars of the 1930s, which worsened the Great Depression and helped produce global conflict.
This open approach to trade came under pressure in the 1980s when a strong U.S. dollar, bolstered by high interest rates and government spending, and American industrial decline caused the U.S. trade deficit to balloon. In his second term, President Ronald Reagan imposed dozens of retaliatory tariffs on European and Japanese exporters in response to what he alleged were unfair trade practices. Congress acted, too, passing bills that mandated tariff increases and import restrictions (in some cases prompting presidential vetoes). But this pivot toward confrontation soon gave way to a new consensus among U.S. officials in favor of even greater liberalization. Both the legislative and the executive branches backed a swath of new trade deals, such as the North American Free Trade Agreement with Canada and Mexico. They helped negotiate and create the World Trade Organization in 1995, which largely banned participating states from enacting tariffs. If one WTO member felt that another was violating this rule, it could challenge that state’s trade practices through the organization’s independent dispute settlement system. If the resulting panel of arbitrators found that the country imposing the original tariffs was in the wrong, the one making the complaint could respond with painful,........