Trade Policy Flash: Trump Administration Tariff Policies Stirring Some in Congress to Reassert Powers
The Trump Administration's aggressive use of tariffs as a negotiating tool against U.S. trading partners has some lawmakers working to assert Congressional authority to review and potentially rescind tariffs proposed by the President under Section 232 of the 1962 Trade Expansion Act (Section 232) and Section 301 of the 1974 Trade Act (Section 301). Miller & Chevalier is in the process of monitoring the situation closely and actively developing related strategies for our clients.
Opening Salvos From the Administration
The President has used Section 232 authority to raise tariffs on imports of steel and aluminum by 25 percent and 10 percent respectively. Also under Section 232, the President is considering raising tariffs by 25 percent on imports of automobiles and auto parts, again citing national security concerns. With regard to this latter initiative, the Commerce Department has started its formal investigation. The agency is also reviewing whether to provide relief to the uranium industry under Section 232, but no remedies have yet been proposed.
Under Section 301, the President has imposed a 25 percent tariff increase on approximately 1,100 8-digit HTS Codes that cover roughly $50 billion in imports from China and has proposed imposing a 25 percent tariff increase on another 6,000 8-digit HTS Codes that cover roughly $200 billion in imports from China. In addition, the President has directed the United States Trade Representative (USTR) to draw up plans for new tariffs on another $267 billion in Chinese products. Chinese products imported into the United States are estimated to total $500 billion annually.
In Congress, while reactions to the new policy have not been uniform, serious concerns have been expressed on both sides of the aisle. Fears of sustained price increases on import-related products and retaliatory tariffs on U.S. exports have several key members looking to restore congressional control over executive branch tariff actions. In June, Sen. Bob Corker (R-TN) introduced bipartisan legislation (H.R. 3013) that would amend the Trade Expansion Act of 1962 to require Congressional approval before the President may adjust tariffs on imports determined under Section 232 to threaten national security. The legislation would also immediately revoke the President's Section 232 tariff actions and require that they be resubmitted for review under the bill's new review regime. The Corker bill is cosponsored by Sens. Heitkamp (D-ND), Toomey (R-PA), Warner (D-VA), Alexander (R-TN), Schatz (D-HI), Johnson (R-WI), Van Hollen (D-MD), Flake (R-AZ), Lee (R-UT,) Sasse (R-NE), Shaheen (D-NH), Isakson (R-GA), Moran (R-KS), Hassan (D-NH), King (I-ME), and McCaskill (D-MO).
Attempts to obtain a vote on the Corker language as a stand-alone bill have been unsuccessful so far. Senate Majority Leader Mitch McConnell (R-KY) initially helped block a vote on the Corker language, intimating the bill was veto bait in any form. Since that time, however, Sen. McConnell has appeared somewhat more open to the idea of voting on the legislation. "There is concern in the conference," Sen. McConnell observed, "and there may be a legislative solution to it." He noted that Senate Finance Committee Chairman Orrin Hatch (R-UT) is considering potential legislative options. "I'll take a look at it," the majority leader says.
Speaking more broadly about the President's tariff policies, Sen. McConnell raised stark concerns. "I hope we pull back from the brink," he said. "I worry that it will slow, if not impede significantly, the progress we were making economically for the country."
Apart from the Corker bill, additional legislative responses have emerged. Sens. Lamar Alexander (R-TN) and Doug Jones (D-AL) are backing a bill to require the International Trade Commission to conduct a study of the U.S. automobile industry before imposing tariffs on the sector. Other bills would require that the Administration submit a report to Congress before imposing Section 232 or Section 301 tariffs. Some would delay such tariffs and rescind them if Congress approves a resolution of disapproval. Sen. Portman recently introduced a bill that would require the Defense Department to justify any proposed new Section 232 tariffs and would provide an opportunity for Congress to reject the tariffs before they become effective.
As Sen. McConnell noted, Finance Committee Chairman Orrin Hatch (R-UT) also is weighing legislative options to rein in Administration tariff initiatives. In this regard, Chairman Hatch warned, "If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority. I am discussing legislative options with colleagues both on and off the Finance Committee and I will continue to do so." [emphasis added]
In July, opponents of the Administration's tariffs notched a small victory in their quest to reassert Congressional authority to set trade policy. By a lopsided vote in the Senate, they adopted in support of their position non-binding instructions to Senate conferees on an FY 2019 spending bill (H.R. 5895). Specifically, the Senate approved a motion, by an 88-11 tally, to instruct Senate conferees on H.R. 5895, the minibus appropriations bill covering energy and water and other appropriations, to "include language [in the conferenced bill] providing a role for Congress in making a determination under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862)."
The House-Senate conference committee ultimately ignored the Corker motion in finalizing H.R. 5895. Nonetheless, Sen. Jeff Flake described the vote as the "strongest and most straightforward message this chamber has delivered against the administration's abuse of trade authority." He promised to press ahead to pass legislation that would require Congress to approve such tariffs.
The chances for enactment of the Corker legislation or any of the other similar bills mentioned above also seem slim. These proposals could be vetoed, and the difficulties of finding a sufficient number of Republican votes to override a veto so close to the elections would be considerable. Even so, there are significant reasons for stakeholders to involve themselves in the congressional debate on this subject and to do what they can to shape the outcome.
First, a vote on the Corker bill when it is first considered in the Senate or later evaluated in the context of a veto override attempt almost certainly will not be the end of the matter in Congress. A strong or a weak performance by opponents of the tariffs could well have significant implications for momentum in a battle highly likely to continue. Thus, even if tariff opponents are certain that they cannot prevail in this "round" of voting, the margin of their defeat in, say, a near-term veto override contest could substantially affect the rhetorical debate on the subject and the next round of voting. That, in and of itself, ought to be enough to motivate stakeholders to weigh in on the legislation right away.
Second, as a related matter, the margin just discussed could well be affected by the substance of the specific legislation voted on. There are immense differences between the Corker bill and some of the bills patterned after it. For instance, while the Corker bill would repeal certain pre-enactment Administration tariff determinations on steel and other imports, most of the other bills would leave such determinations intact. Moreover, while most of these other bills would allow Congress to nullify future tariffs only through the enactment of a joint resolution of disapproval of the tariff (which, significantly, can be vetoed), the Corker bill would allow nullification of such tariffs simply through the defeat in one house of Congress of a resolution of approval. As might be expected, however, the "tougher" Corker bill, the provisions of which would seriously threaten the tariffs in question, would be much harder to enact than the "weaker" alternatives discussed. With such important consequences riding on the selection of the proposal to be pursued, affected stakeholders should be eager to make their views known on that critical selection.
Finally, there is every reason to believe that the current debate marks an important development in the nation's tariff policy history. Stakeholders may therefore not want to absent themselves from decision-making with such significant – and potentially long-term – consequences. That is especially so, since tariffs, once imposed, historically have been very difficult to repeal. Stakeholders that sit out this tariff battle may therefore find themselves anchored to a permanent negative outcome for their business. Note that Charles Lane of The Washington Post concluded an op-ed on this subject last month by observing that if the U.S. and the EU "don't get rid of [the recently imposed] tariffs in the next six months, they might be around for the next 60 years."
Shape the Result or Risk the Result Shaping You
Our clients depend on Miller & Chevalier's International Trade and Governmental Affairs teams to closely track all of these proposals and related developments that could spur legislative action. To stay informed on any of the matters just discussed and, more importantly, impact the outcome, please contact at your convenience Len Bickwit at email@example.com; Welles Orr at firstname.lastname@example.org; or Richard Mojica at email@example.com. We look forward to discussing these matters with you and to helping to devise responsive strategies, both legislative and operational, that best suit your circumstances.
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