In March 2018, the Trump administration announced its intent to impose a ten percent tariff on imported aluminum and a 25 percent tariff on imported steel, based on claims that the tariffs are needed to protect national security interests. In May, the President instructed Secretary of Commerce Wilbur Ross to investigate whether imports of cars and trucks also threaten to impair national security.
America’s trading partners, including China, Canada, Mexico, and members of the European Union, reacted sharply to the tariffs and the investigation. Some nations have responded with tariffs of their own on imports from the United States.
A tariff is a tax on imported goods. Supporters of tariffs claim that they can be useful in forcing other nations to lower their tariffs on imports from the U.S, fighting back against exports from companies that benefit from government subsidies, and nudging nations like China to address other unfair trade practices, such as theft of intellectual property from U.S. companies.
Critics point out that tariffs increase the prices that U.S. companies and consumers pay for goods. U.S. companies may lay off employees as their costs go up, or, in the case of Harley Davidson, decide to move manufacturing jobs abroad. Retaliatory tariffs by other nations can hurt exports of U.S. products to those countries, leading to short-term job losses at home and the possible long-term loss of foreign markets. In Washington state, where farmers who sell their produce in China face 50 percent increases in tariffs on their cherries, apples and pears, one farmer warned that famers from other countries “will snatch up these markets as soon as we stumble.”
Critics also have pointed out that the current round of tariffs are not justified based on national security. According to Secretary of Defense James Mattis, U.S military requirements for steel and aluminum each represent only three percent of U.S. production. Taxing imported cars and trucks is even harder to justify based on national security concerns.
Most trade laws require the President to ask for congressional approval or a review by the U.S. International Trade Commission before imposing tariffs. The current round of tariffs, however, rest on a little-known section of the 1962 Trade Adjustment Act allowing the president to block imports deemed threatening to national security.
Congress has responded to these actions with unusual displays of unity. On July 11 the Senate passed a non-binding (symbolic) resolution supporting a role for Congress before the President can impose a tariff based on national security.
One week later, two Senators – Doug Jones, a Democrat from Alabama, and Lamar Alexander, a Republican from Tennessee – announced they are working on a bipartisan plan to cool down the growing trading war by working on a bill that would require administrative review before the president can impose tariffs on foreign automakers. “The president’s proposed auto tariffs have the potential to inflict serious damage on a booming industry in my state and other leading auto-producing states like Tennessee”, Jones said.