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And third, as argued by Michael Pettis of the Carnegie Endowment, among the most thoughtful of tariff advocates, tariffs can counteract the chronic U.S. trade deficit with the rest of the world. But as Pettis acknowledges, tariffs do that by raising consumer prices and thus depressing import consumption; and tariffs by themselves will not revive U.S. production.
Trade policy has long been an instrument of U.S. foreign policy. In the early days of the Cold War, open access to U.S. markets was a perquisite for U.S. military allies, even ones like Japan that closed their own markets. Later, with the creation of the World Trade Organization, trade policy became an instrument to force U.S.-style deregulation on other countries.
But with the exception of a few concrete goals, such as pressure on Canada and the EU to drop digital regulation or taxation that affects U.S. platform monopolies, Trump’s tariff policy is best understood as an incoherent mash-up reflecting nothing more than Trump’s megalomanic impulsivity. And lost in the chaos is the fact that these tariffs are illegal.
Under Article I of the Constitution, Congress has total authority over tariffs, except for what is expressly delegated to the president. Trump has invoked the 1977 International Emergency Economic Powers Act (IEEPA) to justify his on-again, off-again tariff threats.
That law grants the president broad authority to declare a national emergency and impose economic sanctions against a foreign country that presents an “unusual and extraordinary threat” to U.S. national security, foreign policy, or the economy. But this cannot apply to the entire world, much less to allies like the EU and Canada. Trump’s own rationale for imposing a 50 percent tariff on Brazil has nothing to do with anything other than Trump’s fondness for his ex-dictator pal Jair Bolsonaro. Not exactly a national emergency.
Lower courts have already held that Trump has exceeded his authority. In the case of V.O.S. Selections v. Trump, the Court of International Trade found for the plaintiff and granted an injunction against Trump’s tariffs. The case is on appeal and will be argued before the U.S. Court of Appeals for the D.C. Circuit on July 31. As in other cases of Trump’s seizure of illegal authority, the Supreme Court has avoided getting involved.
So the recklessness of Trump’s tariff gambits will have to be judged in the court of public opinion. Barring a stock market collapse or an all-out trade war, the challenge for critics is that the damage to the economy will be gradual, as will the harm to the U.S. standing in the world.
It is appalling that we live in a time and place where Trump is more likely to be undermined by hysteria over a likely nonexistent Jeffrey Epstein client list than by catastrophic economic policies. |
