Over the past two and half years, President Trump has launched so many unprecedented and disruptive actions on trade that it is easy to become inured. Another day, another tariff. Ho hum. No big deal. That has certainly been the reaction from Congress and from most U.S. companies.
But Trump’s announcement Thursday night that the United States would impose escalating tariffs beginning June 10 on all Mexican imports is so significantly worse than anything he has done to date that silence and inaction from the Congress and business will do incalculable harm to the United States. If Trump can get away with this one, then there is nothing on trade he will not be permitted to do. Unless Congress overturns the new tariffs on Mexico, it will have granted Trump unlimited powers to impose tariffs, for whatever reason, whenever the mood strikes him.
There are at least three reasons why Congress cannot allow this action to stand.
First, it is the deepest betrayal yet of any U.S. trading partner, one that will leave a scar in U.S.-Mexico relations for years to come. No nation has endured more verbal abuse from the president than Mexico, beginning with the 2016 campaign when Trump accused Mexico of sending rapists and drug dealers to the United States. Yet two successive Mexican governments nonetheless turned the other cheek and engaged in serious negotiations with the Trump administration to rewrite the North American Free Trade Agreement (NAFTA).
The new United States-Mexico-Canada Agreement (USMCA) did much of what Trump had demanded—it rebalanced NAFTA in ways intended to favor the United States more, and Mexico and Canada less. Yet both countries—certainly aware of their dependence on the U.S. market—swallowed hard and did the deal anyway.
Now, literally on the day that the Mexican government (and the day after the Canadian government) had submitted the USMCA for ratification by their legislatures, Trump announced the new tariffs against Mexico. The biggest single reason for countries to enter into free trade agreements is to protect themselves against arbitrary and unilateral tariffs. Trump’s actions cut the heart out of NAFTA and the new USMCA. Unless the Congress intervenes or Trump changes his mind, the new USMCA is dead. Just as importantly, no other country—no matter how closely allied or how dependent on the United States—will be willing to negotiate any agreements with this administration, knowing they can be torn up at the whim of the president.
Secondly, the new tariffs on Mexico are a wholesale abuse of the laws passed by Congress. It is important to appreciate how much worse this action is than anything else the administration has done on trade to date. The Section 232 tariffs on steel and aluminum were at best thinly justified, and if Trump had followed historical precedent, free trade partners like Canada and Mexico would have been exempted. But the tariffs at least had statutory justification, and they were imposed against virtually all the major exporters of steel and aluminum.The Section 301 tariffs against China similarly have statutory justification (even if they almost certainly violate U.S. obligations under the World Trade Organization). And Congress has been broadly supportive of the administration’s efforts to get tough over what is seen, justified or not, as serial violations of trade rules by China.
In taking action against Mexico, the White House has cited its authority under the International Emergency Economic Powers Act (IEEPA) of 1977. As Gary Hufbauer of the Peterson Institute wrote in his seminal election year analysis, the purpose of IEEPA was to give the president tools to impose economic sanctions on America's enemies and adversaries in the face of “unusual and extraordinary threats.” It was never intended to give the president carte blanche authority to impose tariffs on close allies.
Using IEEPA to justify tariffs is a flagrant abuse of the congressional statute. If the Congress lets Trump get away with this, he will be free to slap tariffs on any country or any product at any time for whatever reason he dreams up. Congress’s constitutional authority over trade will be utterly hollow. Hufbauer anticipated in 2016 that an effort by Trump to impose tariffs under IEEPA “would be vigorously challenged as a massive usurpation of congressional power.” If it is not, then the Congress has truly ceased to function as a law-making body.
Finally, the president’s decision to link trade to immigration and refugee concerns is an especially dangerous escalation. The White House says that it would be willing to remove the tariffs if Mexico somehow takes action to apprehend and return all Central Americans trying to cross the country to seek asylum in the United States. The adequacy of such response will be “determined in our sole discretion and judgment.”
Consider the hypocrisy of this demand. The United States has been unable to respond to the growing numbers of asylum seekers arriving at the southern border—because of holes in our own laws that Congress won’t fix, the tragic neglect as crime fueled by U.S. demand for drugs soared in Central America, and the president’s bone-headed insistence on building a useless wall. So instead, the United States is now demanding, under threat of warlike economic sanctions, that Mexico do for us what we are unable to do for ourselves. Even if Mexico could do more to help alleviate the border crisis, what self-respecting government would respond to such a threat?
By linking trade and immigration in this fashion, Trump has opened the door to all sorts of damaging responses from Mexico and other countries. Will Mexico continue to cooperate with the U.S. on drug investigations? Will China limit its future retaliation to trade or look for other areas to harm the United States? The raw power of the United States will surely give other countries pause, but this is another giant step away from the rule of law and towards the rule of the jungle.
This is the day Congress and powerful American businesses should finally wake up to the threat that Trump’s trade policies pose to this country, and to the world. I would like to say I am optimistic this will happen. More likely, I’m afraid, it will again be greeted with a shrug.