Legislators may get their chance this fall to take back some of the authority on tariffs they gave away more than 50 years ago while also handing a rebuke to President Donald Trump.
Senate Finance Committee Chairman Chuck Grassley’s staff is working to combine two bipartisan bills to give Congress the power to approve or reject the president’s ability to hit foreign countries with Section 232 tariffs, which were originally designed to punish countries that threaten U.S. national security. Implicit in both bills is the mistrust of the White House to gauge what constitutes harm to national security. Grassley told reporters last week he hopes to be ready with a “compromise bill” in September or October.
“Members of Congress feel they have a constitutionally mandated role in trade that has been minimized over time and they want to reassert themselves in the process,” says U.S. Dairy Export Council President and CEO Tom Vilsack.
“During the height of the Cold War, Congress delegated sweeping power to the executive branch to adjust imports on the basis of national security,” Grassley said in April. “That was understandable given the era, but the benefit of time and experience has proven our Founders right in tasking Congress with authority over tariffs.”
Sen. Chuck Grassley, R-Iowa
The rush to retake that control gathered steam after Trump announced last year that steel and aluminum from China, Canada, Mexico, India, Turkey, Brazil, South Korea, Japan and the European Union were a threat to the security of the U.S. Some countries struck a quick deal to avoid the tariffs. Some, like China, did not, and retaliated with their own tariffs.
Sen. Pat Toomey, R-Pa. has support from Republicans and Democrats for his Bicameral Congressional Trade Authority Act and Sen. Rob Portman, R-Ohio, has similar backing for his Trade Security Act. The two bills are similar, but also contain sharp differences like the fact Toomey’s legislation is retroactive. Within 75 days of enactment, it would require the Senate and House to approve all 232 tariffs levied over the past four years. If they did not, the tariffs would be repealed.
Both bills would require the Defense Department — instead of the Commerce Department — to perform an analysis to determine if imports represent a threat to national security.
Senators from both parties have chafed publicly at Trump’s use of the tariffs. Canada, they pointed out to Commerce Secretary Wilbur Ross in a June 2018 hearing, did export steel to the U.S., but imported even more of the metal from the U.S.
Ross testified the use of the White House–directed tariffs, allowed for under Section 232 of the Trade Expansion Act of 1962, were aimed primarily at China. China exported very little steel directly to the U.S., Ross explained, but much more arrived through third or fourth countries and often in a modified form.
But senators were not mollified as China, Mexico and Canada threatened to retaliate.
“Recently Mexico announced it will impose tariffs of 20 percent on U.S. pork in retaliation for U.S. steel and aluminum tariffs,” former Senate Finance Committee Chair Orrin Hatch said at the hearing. “I just don’t see how the damage posed on all these sectors could possibly advance our national security.”
It wasn’t long before all three countries did retaliate, and it was the U.S. ag sector that bore the brunt of the revenge. Mexico levied tariffs on U.S. pork, cheese, apples and potatoes. China lashed out at oranges, almonds, apples, pork, walnuts and broccoli. Canada began taxing mostly value-added products like ketchup and yogurt.
Trump, despite the alleged threats to national security, canceled the steel and aluminum tariffs on Canada and Mexico after the countries’ leaders agreed to terms for the renegotiation of the North American Free Trade Agreement.
Apple producers were some of the farmers hit the hardest and they are still suffering from retaliation to Trump’s 232 tariffs, says Mark Seetin, director of industry and regulatory affairs for the U.S. Apple Association.
“Our apple exports last year were down 27% from the prior year,” he said. “And the value of those exports was down $240 million.”
Mexico, India and China all hit U.S. apples in retaliation for the 232 tariffs. China levied another import tax on the fruit in response to a second wave of U.S. tariffs to punish the country for its policies to accumulate U.S. intellectual property.
“We got retaliation from all our major customers,” Seetin said. “It’s like a hammer on us.”
Tom Vilsack, U.S. Dairy Export Council
The dairy industry was hit hard by Mexican retaliation and is still suffering under Chinese retaliation, but yet another hammer could fall in the near future, said Vilsack, a former Obama administration ag secretary.
“From a dairy perspective, it’s a good idea for Congress to exercise oversight and to make sure that if Section 232 is used, it’s used for its proper purpose, which is to respond to genuine national security threats.” he told Agri-Pulse. “We’re certainly happy that the 232 retaliation that impacted our cheese exports to Mexico was finally resolved, but we are keeping a wary eye on potential problems with Japan.”
Japan is negotiating a free-trade agreement with the U.S., but only under the threat that the U.S. will hit Japanese cars and car parts with 232 tariffs. A few rounds of talks have already been held — the latest was in Washington last month — and if all goes well, the U.S. ag sector will benefit from increased access to one of its biggest foreign markets.
If talks don’t go well U.S. ag could lose even more of the market share in Japan, which has already cinched trade pacts with the EU and Pacific Rim countries, whose exporters now enjoy lower tariffs than U.S. competitors.
It’s a similar situation with U.S. and Chinese negotiations, Vilsack said: “It may be terrific or it may be absolute disaster. You just don’t know.”
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