As a condition of ending the shutdown, Democrats should curb the president’s tariff powers.
H. L. Mencken, the Sage of Baltimore, grounded American democracy in the notion that the “common people know what they want and deserve to get it good and hard.” Critics have used that intuition to throw tariff shocks back in the faces of Trump backers. “You voted for this,” comes the refrain.
That is not entirely true or fair. Yes, enough people in enough states voted to send Donald Trump back to the Oval Office after one term spent in the penalty box, but they did so for different reasons and without good alternatives, at least on this issue. The Biden administration, whose policies Trump opponent and Vice President Kamala Harris embraced, was hardly a champion of free trade.
President Joe Biden kept in place many of Trump’s first-term tariffs and also enacted additional ones. Last September, Biden’s Office of the United States Trade Representative announced more China sanctions: new tariffs on metals, microchips, electric vehicles, batteries, critical minerals, and other tech and medical products.
Even the Biden administration’s feints in the direction of free trade were weak and did nothing to pull nations away from China’s sphere of influence and toward the U.S. In December, the first agreement under the U.S.-Taiwan Initiative on 21st Century Trade became law. “The agreement is not a conventional free trade agreement and it does not address market access issues,” explained Sheng Lu, a business professor at the University of Delaware. Rather, it continued the lamentable trend of making trade agreements about many other issues — so that free trade gets squeezed out.
The tariffs leveled by the first Trump administration were demonstrably bad for the U.S. economy. “The full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018,” wrote economists Mary Amiti, Stephen J. Redding, and David E. Weinstein in the Journal of Economic Perspectives.
Nor were Trump’s tariffs good for U.S. manufacturing, as some have claimed. Research by the Federal Reserve found that manufacturing employment declined 2.7 percent after Trump’s first round of tariffs. Any manufacturing jobs protected or gained were swamped by manufacturing-job losses due to rising input costs and retaliatory tariffs.
Yet there is some distance on tariffs between bad outcomes and financial apocalypse. It made sense to think that Trump II would be similar to Trump I — with threats of tariffs, a few agreements renegotiated, and a trade ratchet on Beijing. China gave us Covid, and now it gets more tariffs: That was the bargain that many Americans, and certainly many Trump supporters, were willing to accept.
Because of that expectation, many businesses had already begun friendshoring production away from China. New factories were ramping up in other countries that are seen as more sympathetic to U.S. interests.
Trump took a flamethrower to that careful hedge on Liberation Day, April 2. From the Rose Garden, he announced a 10 percent baseline tariff on most goods entering the U.S. market, as well as a hodgepodge of what the administration confusingly called reciprocal tariffs — confusing because they bear no relationship to tariffs being leveled by other countries on U.S. goods.
Many nations responded with threats of tariffs. A worldwide trade war loomed. The financial shock was immediate and staggering. Financial markets in the United States and elsewhere had a massive selloff that wiped out perhaps $10 trillion of value in just a few days. Facing the likelihood of a worldwide recession, the White House delayed implementing some of those tariffs.
Various American parties brought lawsuits challenging Trump’s authority to impose such a scheme without the consent of Congress. The administration has suffered a string of defeats in the courts for trying to use the International Emergency Economic Powers Act of 1977 as a basis to impose tariffs on most inhabited nations, along with one island populated entirely by penguins.
Trump’s relentless pursuit of tariffs this time around is broadly unpopular. Only 34 percent of Americans surveyed approve of his tariffs, versus 58 percent who disapprove, according to the September Strength In Numbers/Verasight poll. Results suggest that this is having a knock-on negative impact on the economy and on how Americans view his policies generally.
Congressional Democrats have made angry speeches and voted for resolutions disapproving of Trump’s economic mismanagement. They could be doing more to spring the tariff trap. As the government shutdown drags on, Democrats are negotiating over the conditions under which they will support funding the government. One of those conditions should be language chipping away at the tariff-making power.
Limiting tariffs as a condition of support was first touted (so far as I can tell) by Brookings Institution scholars Wendell Primus and Molly E. Reynolds in a September commentary. “We could imagine any number of policies . . . emerging as demands,” they wrote, pointing specifically to the curbing of Trump’s tariffs.
The Brookings wonks argued that tacking tariff limitations onto a longer list of demands could even help avert a shutdown, but the same logic could be applied to ending one. “Strategically,” adding tariffs and other items to the list could “provide an off-ramp if any one of them is met,” they wrote.
Primus and Reynolds might have added that limiting the president’s tariff-making power is particularly appropriate as a demand. It’s a power that Congress has in the Constitution and that it only, and arguably improperly, lent to the executive with the goal of furthering free trade.
The Supreme Court has a role to play as well. Court watchers expect the justices to rule against the Trump administration’s tariffs any day now, but there is a wrinkle. Under Chief Justice John Roberts, the court has often preferred narrow rulings over expansive ones. The impulse is laudable, yet the court might save itself and America a lot of additional trouble here by banging its gavel down extra hard.