Perils of Broad Presidential Power Over Tariffs
Donald Trump’s plan to impose massive 10% or greater tariffs on all imported goods is a centerpiece of his potential second term policy agenda. If implemented, it would cause enormous harm to the US economy, raise prices on many goods, and seriously damage relations with our allies. The potential damage is likely to be enormous. Trump’s tariff plan is even more dangerous than it might be otherwise, because he can probably implement it without any new congressional authorization.
As Trump himself puts it,  “I don’t need Congress [to impose tariffs]…. I’ll have the right to impose them myself, if they don’t.” If he’s right, that differentiates it from many other harmful policy ideas put forward by presidential candidates, that do require new legislation, which would often be difficult or impossible to push through a closely divided Congress. That’s true of Kamala Harris’s awful rent control and price control plans, for example (she has recently scaled back the price control proposal).
Is Trump right to claim the president has unilateral authority to start a massive trade war? Under current legislation and judicial precedent, the answer is likely yes. My Cato Institute colleagues Clark Packard and Scott Lincicome have published a valuable new analysis of this crucial issue. Here’s the summary of their findings:
Article I, Section 8 of the US Constitution grants Congress the power to “lay and collect Taxes, Duties, Imposts and Excises,” and to regulate commerce with foreign countries. From the founding of the republic through the early 1930s, Congress set tariff rates through legislative revisions to the US tariff schedule. Low tariffs were initially imposed to raise revenue for the federal government, but tariffs became a tool to protect domestic producers from foreign competition. Throughout this period, tariff rates fluctuated with the makeup of Congress, while the president was largely a bit player in setting international trade policy.
This approach to US tariffs changed dramatically following the disastrous Trade Act of 1930, better known as the Smoot-Hawley Tariff Act after its sponsors Rep. Willis C. Hawley (R‑OR) and Sen. Reed Smoot (R‑UT). The act was signed by President Herbert Hoover in June 1930 over the objection of virtually every prominent economist at the time; it became the largest tariff hike in US history, inflicted serious damage to the US economy and international relations, and vividly demonstrated the shortcomings (and outright corruption) of congressional tariff-setting.1
In response, Congress delegated large amounts of its international economic authority to the executive branch in 1934 and through subsequent laws, under the prevailing assumption that the president was far less likely than Congress to be influenced by parochial interests and rent-seeking lobbyists—and thus far less likely to repeat Smoot-Hawley. For about 85 years, this bipartisan approach proved successful: major tariff hikes and trade wars were avoided and international trade flourished.
That changed wi
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