Congress must use the USMCA to stop Trump’s trade abuses
The Trump administration is escalating pressure on Congress, especially Democrats, to quickly approve the new US-Mexico-Canada Trade Agreement (USMCA) signed last November. At the same time, the administration continues to reserve the right to slap tariffs on Mexico over the immigration issue, a threat that has provoked furious criticism on both sides of the aisle as an abuse of the president’s trade authority.
These developments come on top of the president’s bogus use of national security arguments to impose tariffs on steel and aluminum, and his threats to do the same on automobiles and to withdraw from NAFTA without congressional authority.
Congress now has an obvious opportunity to put its money where its mouth is on stopping all this abuse of congressional authority on trade. Lawmakers should act urgently to rein in the executive branch by using passage of the USMCA as a vehicle. It should force the administration to cease its threats to use tariffs over immigration and more generally end its violation of legislative authorities in implementing trade policies.
Republicans and Democrats may be more receptive than one might think. Why should lawmakers approve the USMCA if Trump insist on the right to abrogate it for extraneous reasons?
Presidents do have some authority to act on trade unilaterally, of course. Congress has traditionally delegated authority to the president to negotiate trade agreements within guidelines determined by Congress itself. This arrangement has facilitated trade openings for decades.
The administration’s trade policies of imposing tariffs on valued trading partners are of dubious legitimacy and extremely costly to the U.S. economy and foreign policy. By invoking national security to reverse past trade agreements and using other bogus arguments, the Administration is violating the intent of the legislative branch and arguably at least some of the laws it is invoking.
Congress should accompany consideration of the USMCA with a requirement that the president seek congressional approval, or at least consult formally with lawmakers, regarding any proposed new tariffs on the basis of an analysis of their potential benefits and costs in both economic and foreign policy terms. Congress should more sharply define “national security” to prevent abuse of the relevant statutes. Congress should also specify that, just as it must approve any new trade agreement, it must approve withdrawal from any previously adopted trade agreement.
There is no evidence that imports of steel and aluminum from some of our closest allies—Canada, Europe, Japan, Korea, Mexico and Turkey—have damaged or threaten to damage national security and hence no basis for the president’s invocation of national security to impose tariffs on those products.
There would be even less justification for invoking that rationale to impose import restrictions on motor vehicles and parts. It is ludicrous to argue, as does the secretary of Commerce, that research and development by “American automotive companies” (presumably only Ford, General Motors and Tesla) is essential for national security and that restricting competition in the U.S. auto market would encourage such investment.
An even more egregious stretch is the president’s threat to apply tariffs against all imports from Mexico unless that country restricts immigration into the United States. The White House justified such action by invoking the International Emergency Economic Powers Act of 1977 (IEEPA). But tariffs have never been used to pursue such a non-trade objective and IEEPA has never been used to impose tariffs.
If fully implemented, all of the mooted tariffs — or their equivalents via quotas or negotiated managed trade agreements — would essentially apply a tax of 25 percent to more than $1 trillion of U.S. imports including more than $500 billion from China, $350 billion from Mexico and, from other countries, $300 billion of autos and parts, and $50 billion of steel and aluminum the equivalent of a tax increase of more than $250 billion on the American public. In addition, the countries hit by the U.S. tariffs will retaliate, doubling the jolt to the U.S. economy.
President Trump has threatened to withdraw from NAFTA, supposed to force congressional approval for his renegotiated USMCA. Such a step would disrupt supply chains in the automotive, textile/apparel and other sectors. It is doubtful that the president has authority to do so without congressional approval, but Congress should reiterate that point.
The uncertainty surrounding all these actions and threats deters investment and dampens confidence in the economic outlook, as we are already seeing. Taken together, a full percentage point or more of U.S. growth could be lost. The uncertainty also trashes the credibility of the United States as an ally, negotiating partner and proponent of the rule of law.
The checks and balances governance system has traditionally relied on statesmanlike administrations to counter a protectionist Congress. We now need a far-sighted Congress to counter a protectionist president.
Bergsten is senior fellow and director emeritus at the Peterson Institute for International Economics, of which he was founding director.