Changing How America Trades: Two Approaches

The United States and China are in a trade war. Simmering for over a year, the conflict between Washington and Beijing has escalated in recent weeks as President Trump announced that he was raising tariffs on many goods imported from China. Trump’s decision prompted Beijing to retaliate by raising the rates of its own tariffs on goods imported from the United States. Amidst all of this, negotiations between the world’s two largest economies have broken down. And Congress is missing in action.

While Americans may disagree over what constitutes the best trade policy, they appear to be in general agreement that Congress is broken. The present impasse is merely the latest episode in a larger drama in which Congress has given up its policymaking power to the president. The deference to Trump's tariffs exhibited by free-trade Republicans in the Senate is typical of the broader deference Congress has shown to the president since the 1930s when it first gave up its power as part of the effort to combat the Great Depression.

Yet every challenge allows Congress to reclaim its policymaking power from the president. Trade wars are no different. Trump’s actions have sparked bipartisan opposition in Congress and have prompted some senators to try reforming one source of the president’s power to adjust tariffs unilaterally in certain circumstances. For example, the Chairman of the Senate Finance Committee, Chuck Grassley, R-Iowa, announced in March that he would unveil bipartisan legislation to address this issue in “the coming weeks.”

Assessing the future effectiveness of legislation is not always easy. Yet a close examination of the two leading Senate proposals in this area highlights the approach that Grassley is likely to take if he intends his legislation to actually reassert Congress’s policymaking power over trade. 

Section 232 Reform

Congress gave the president power to adjust tariff rates in consultation with his Secretary of Commerce in Section 232 of the Trade Expansion Act of 1962. While Congress originally intended that power to be used narrowly, for national security purposes only, the statute places no limits on how the president defines what imports constitute a threat to national security. Trump has used his power under Section 232 to raise tariffs on imports ranging from steel and aluminum to automobiles and auto parts.  

Two Approaches

Senators Rob Portman, R-Ohio, and Pat Toomey, R-Penn., have introduced competing proposals to reform the Section 232 process. (Note that both bills aim to change the process by which Congress would review presidential actions under Section 232. Neither bill would eliminate that power altogether.)  

The Trade Security Act

Portman’s Trade Security Act (S. 365) allows Congress to disapprove presidential actions taken under Section 232 after they have become effective. Specifically, the legislation

  • Requires the president to consult with the Secretary of Defense instead of the Secretary of Commerce to determine if an import poses a threat to national security;

  • Gives the Secretary of Defense 200 days to determine if a threat exists;

  • Authorizes the president to direct the Secretary of Commerce to develop recommendations on how to address the threat once it has been determined to exist;

  • Gives the Secretary of Commerce 100 days to submit recommendations to the president;

  • Allows the president to take whatever action he wants within 75 days of receiving the Commerce Secretary’s recommendations;

  • Requires the president to report to Congress within 30 days of making a decision to act on why he decided to act;

  • Directs the president’s report to be referred, upon receipt, to the Committee on Ways and Means in the House and the Finance Committee in the Senate;

  • Establishes a special process by which the House and Senate may consider a joint resolution of disapproval if reported by the Ways and Means and/or Finance committees. 

The Bicameral Congressional Trade Authority Act

Toomey's Bicameral Congressional Trade Authority Act (S. 287) requires Congress to approve all presidential actions taken under Section 232 before they become effective. S. 287 resembles S. 365 in that the legislation requires the president to consult with the Secretary of Defense instead of the Commerce Secretary to determine whether an import poses a threat to national security. However, the two measures differ in essential ways. Specifically, S. 287

  • Narrows the definition of what constitutes a threat to national security;

  • Directs the president to submit a report to Congress detailing his proposed actions and the reasons for doing so;

  • Requires Congress to approve all presidential determinations that an import poses a threat to national security;

  • Allows the president to take action under Section 232 within 60 days only after Congress has passed a joint resolution of approval that he has signed into law.

Pros and Cons

S. 365 and S. 287 both aim to rebalance the relationship between Congress and president in the policymaking process by reforming Section 232. Yet while similar, the two proposals would not have the same effect. This is because the special process established by in S. 365 is not very special at all. On closer inspection, it merely creates the appearance of doing something while actually doing nothing. If S. 365 is signed into law, the president will remain structurally advantaged in the Section 232 process. His ability to veto a joint resolution of disapproval means that, in practice, a two-thirds majority of the House and Senate would be needed to overcome presidential opposition. Moreover, the president’s supporters could filibuster the resolution in the Senate, thereby preventing its passage. For that reason, the approach taken in S. 365 is likely to appeal to senators whose policy positions are not aligned with their rhetoric or who otherwise do not want to break publicly with the president.

In contrast, S. 287 empowers Congress instead of the president in the Section 232 process. This is because it requires the House and Senate to pass a joint resolution of approval (which must then be signed into law by the president) before any proposed tariff adjustment can take effect. S. 287 also empowers the rank-and-file in the House and Senate by preventing the Ways and Means and Finance committees, respectively, from blocking action on an approval resolution by bottling it up. S. 287 also prohibits senators from filibustering a motion to proceed to a resolution of approval, thereby ensuring that the measure will be debated on the Senate floor as long as it is supported by a majority of the institution’s members.

Conclusion

If the legislation unveiled by Grassley adopts the approach taken in S. 287, it will signal that the chairman and, by extension, the Senate, is serious about reclaiming its power to make trade policy in this limited area. If, however, the legislation is modeled on the disapproval process outlined in S. 365, it will suggest that Grassley and, by extension, the Senate, wants only to create the appearance of reasserting Congress’s power over the policymaking process without actually changing its relationship with the president in this specific area.

While Trump has admittedly relied on a different statutory authority for most of his retaliatory tariffs in the trade war with China, reforming the Section 232 process is nevertheless a good first step that Congress can take toward reclaiming its rightful role in the policymaking process.