Free Trade

Congress Passed a New North American Trade Pact but Failed To Limit Trump's Tariff Powers

Republicans might rue that mistake when Elizabeth Warren or Bernie Sanders inherits Trump's beefed-up trade authority.


The newly passed North American trade deal has some serious flaws, but the agreement's passage through Congress is a welcome sign that there will be greater stability for companies doing business across the continent.

At least until President Donald Trump lashes out again.

In approving the new United States–Mexico–Canada Agreement (USMCA) last week, Congress missed an opportunity to put some much-needed limits on the president's unilateral authority to issue tariffs for specious "national security" reasons. That's despite the fact that prominent Senate Republicans repeatedly signaled their intention to use the USMCA as an opportunity to attach provisions that would prevent presidents from taking brash actions to raise trade barriers, as Trump did in March 2018 when he suddenly slapped new tariffs on imported steel and aluminum.

Those tariffs were imposed by invoking Section 232 of the Trade Expansion Act of 1962, which grants presidential authority to quickly impose tariffs on national security grounds. Pretty much everyone besides Ron Vara agrees that imported aluminum and steel are not threats to American national security, so Trump's actions served mostly to highlight the vast powers presidents have to dictate the terms of trade.

"I'm certainly not confident that the USMCA prevents the president from taking other actions that could undermine the trading relationship with our two largest trading partners," says Inu Manak, a research fellow for trade policy at the Cato Institute.

Start with what's missing from the deal itself, Manak says in a recent episode of the Cato Daily Podcast. The deal does not grant Canada and Mexico an exemption from future Section 232 tariffs—though it did grant a partial exemption to the existing steel and aluminum tariffs. But Trump has repeatedly talked about imposing similar "national security" taxes on cars imported from Europe or Mexico, bringing the idea up again just this week while meeting with world leaders in Davos, Switzerland.

"So the president could technically still impose tariffs on Canada and Mexico on other issues that he thinks are a concern for national security," Manak says. "At the end of the day, there's still a lot of uncertainty left over, and a lot of leeway for the president to do what he wants."

This issue goes beyond Trump. In the first 54 years that Section 232 was on the books, presidents had invoked its powers only six times. Trump's repeated use of it to reshape global trade is effectively redefining the law's powers away from concerns about national security and turning Section 232 into just another tool for presidents to make policy.

That's one reason some members of Congress—mostly Republicans, but some Democrats too—have been wary about Trump's unilateral tariffs. Even the ones who don't disagree with what he's doing worry about what might happen when someone else is in the White House.

For a long time, it looked like Sen. Chuck Grassley (R–Iowa) was willing to play hardball with Trump to limit presidential tariff power. Grassley chairs the Senate Finance Committee, which handles trade issues, and he threatened to block Trump's USMCA deal unless the White House lifted the tariffs on steel and aluminum from Mexico and Canada. Trump backed down.

Grassley also said repeatedly that he was considering legislation to stop Trump's abuse of Section 232. "Congress has delegated too much authority to the president of the United States," Grassley told reporters in June. "This is not about Trump. It's about the balancing of power."

By late August, Grassley was saying the Senate Finance Committee would soon consider two bills to limit Trump's Section 232 powers: the Bicameral Congressional Trade Authority Act, sponsored by Sens. Pat Toomey (R–Penn.) and Mark Warner (D–Va.), and the Trade Security Act, sponsored by Sens. Rob Portman (R–Ohio) and Doug Jones (D–Ala.).

The Toomey-Warner bill is the better of the two. It would give Congress the ability to block future tariffs imposed under Section 232, limit the the definition of "national security" in the law, and require the Pentagon to sign off on the tariff declaration—as opposed to the Commerce Department, which handles it now. Congress would have 60 days to review and vote on any proposed Section 232 tariffs.

The Portman-Jones bill would require Congress to pass a resolution disapproving of a tariff in order to revoke it, while Toomey-Warner would require congressional assent before tariffs could be imposed. This would essential force Congress to be part of the discussion, removing the possibility that a do-nothing legislature would allow a president to act unilaterally.

By November, it was becoming clear that Trump's USMCA would pass through Congress without reforms to Section 232. Grassely, in remarks given on the Senate floor, said the reforms had been delayed by "stakeholders who are profiting from tariff protection" and colleagues who don't want to upset Trump.

Earlier this month, Politico reported that Grassley still sees Section 232 reforms as a top priority for 2020. But in passing the USMCA without adding limits to Section 232, Congress may have given away its best leverage to force changes. After all, Trump can veto whatever bill might eventually pass—and if Grassley is having this much difficulty simply getting some reforms out of his committee, it's unlikely there is enough support to override a presidential veto.

That is how presidential power expands. Congress delegates poorly. Presidents gradually ignore limits on how their power can be used. Then they pass along an aggrandized executive branch to the next guy (or girl) in line.

Congressional Republicans may regret their passive response to Trump's Section 232 abuses when a President Sanders or Warren imposes tariffs for his or her own protectionist reasons—or to fight emissions, as some on the left are already suggesting. But they'll only have themselves to blame.