The Pros and Cons of Trump’s Tariff Bomb
The president has some good and not-so-good reasons for tariffs, which will both hurt and help.
Donald Trump is a bomb dropper. He sees a broken system and blows it up with the idea of starting over or at least fixing the mess. There’s a lot of that at play with tariffs. To change metaphors, it’s fair to say Trump is playing a long game with trade, and an important one. The trouble is that he sometimes overplays his hand.
Tariffs and their fallout are front-page news everywhere this morning after Trump’s virtual atom bomb on Wednesday. Trump-hating legacy media personalities and social media influencers who became economic experts on Wednesday scream, The stock market is down big! Other countries are retaliating! This is a Great Depression disaster like Smoot-Hawley! Oh no!
To be fair, many really smart people on the conservative side are saying those things, too. It’s not just Trump derangement that makes a person see his faults.
Still, it sells advertising for media talkingheads to light their hair on fire in front of the camera. Fortunately, since we don’t sell any advertising — we rely on your support — I don’t have to burn my rapidly graying head. I can instead look at the whole tariff thing analytically, so bear with me as I start with the bad news and get to Trump’s understandable rationale later.
We are constitutionalists, first and foremost, so a good bit of our concern is with Trump’s authority. Article I, Section 8 grants Congress the sole authority “To lay and collect Taxes, Duties, Imposts and Excises.”
Congress outsourced some tariff power to the president via the Reciprocal Trade Agreements Act of 1934, the Trade Expansion Act of 1962, the Trade Act of 1974, and the International Emergency Economic Powers Act of 1977. “While the Constitution granted Congress, not the executive, the power to set tariffs,” write the editors of the Washington Examiner, “Congress has meekly handed them over, and the Supreme Court has blessed the transfer of power.” Frankly, that still doesn’t settle the constitutional questions.
In this case, Trump has used his claimed authority to enact what the Examiner calls “the second-highest tax hike in the nation’s history, the highest being the Revenue Act of 1942, which Congress passed to pay for World War II.”
National Review’s editors likewise say, “As a share of the economy, the executive order is likely the largest peacetime tax increase in U.S. history.”
It’s a regressive tax, too, hitting low-earners proportionately hardest.
Back for the authority, the editors of The Wall Street Journal argue, “No previous President has used that [1977] law to impose tariffs” as Trump has. “Mr. Trump is stretching his authority much as Joe Biden did with his student-loan forgiveness.” They continue:
Congress has circumscribed the President’s power to impose tariffs, allowing it on imports that threaten national security (Section 232) or in response to “large and serious” balance-of-payments deficits (Section 122), a surge of imports that harms U.S. industry (201), and discriminatory trade practices (301).
None of these trade provisions empowers Mr. Trump to impose tariffs on all imports from all countries based on an arbitrary formula. Section 122 lets a President impose tariffs of up to 15% in response to trade deficits, but Congress must approve them after 150 days. Someone should sue to block his abuse of power.
