The Hidden Politics of Whiskey Prices

You've probably heard that President Donald Trump is prepared to slap some huge tariffs on nearly all imports from Canada and Mexico this week.

But you might also be wondering: How is it that the president can unilaterally decide what tariffs get charged on which imports? And if he's determined to make everything from Canadian whiskey to Mexican avocados more expensive, can anyone stop him?

"It absolutely should not be one person making these decisions," Rep. Suzan DelBene (D–Wash.) tells Reason. She's sponsored a bill that would require Trump—and any other future president—to get permission from Congress before using emergency economic powers to levy new tariffs on American consumers.

To understand why that matters, it might help to first know a bit about how tariffs work.

Say you want to buy a bottle of whisky from a distillery in Canada. Since the 1990s, nearly all products have been able to cross into the U.S. from Canada and Mexico without paying any tariffs—thanks to the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). Now Trump wants to tear up those rules and impose a 25 percent tariff on almost everything that crosses the border.

So imagine a bottle of whiskey that costs $20 at the store. Under Trump's tariff plan, that bottle would have to pay an additional $5 tariff just to get into the U.S., and that higher cost gets passed along to you. It's a tax.

If a president wants to raise taxes, typically he's got to get approval from Congress. So how is it that Trump can raise taxes on whisky and lots of other products simply with an executive order?

DelBene says that shouldn't be allowed.

"When we talk about taxes and whether or not we raise or lower taxes, Congress has the authority there," she says. "Congress is an independent, co-equal branch of government. Congress needs to say these are not things that the executive gets to decide unilaterally."

The Constitution gives Congress the final say over not just taxes but trade policy too. But lawmakers have given away that authority in bits and pieces since the 1940s. It was assumed that presidents would be more willing to look out for the nation's best interest and less likely to support protectionism for specific industries.

Unfortunately, it hasn't worked out that way. Now the president has vast power over trade, and Trump is taking advantage of that.

The law that Trump is using to put tariffs on goods from Canada and Mexico is called the International Emergency Economic Powers Act (IEEPA). To activate its powers, a president has to declare a state of emergency. Delbene says that's where Trump is overstepping.

Until now, the law has only been used to impose sanctions on foreign countries. DelBene's bill would explicitly prevent a president from using IEEPA to impose tariffs. She's also sponsored a resolution to block the tariffs and cancel the economic emergency that Trump declared in early February.

"First of all, these are allies. These are not hostile foreign nations. And so we have a trade agreement with both of these nations," DelBene says. "If the president, any president, wants to put in place such broad tariffs, they have to come to Congress and get approval from Congress. That's what the Constitution says."

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