The recent G7 summit was memorable for a lot of headline-grabbing quotations, but the most notable event was President Trump’s feud with Canadian Prime Minister Justin Trudeau. Taking to Twitter, the president mused, “Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!”
While President Trump is half-right that Canadian and European tariffs are unfair to American farmers, workers, and companies, he errs by concluding that the answer should be retaliatory tariffs on American imports from these countries.
President Trump’s sentiment appears fair at first sight. If Canada and European countries impose tariffs on American goods, the U.S. ought to level the playing field by imposing similar duties on goods and services. Despite these good intentions, the bad news is that trade wars resulting from retaliatory policies cause more harm than good for all involved.
The reason trade wars make for careless policy stems from the burden placed on individuals. Because tariffs are effectively taxes on imported goods—in the case of the tariffs on Canada and Europe, those goods are everyday commodities such as chocolate, coffee, peanut butter, denim, corn, cars, and t-shirts—paid by consumers in the form of higher prices. The consumers, not the country being targeted, end up bearing the brunt of a trade war.
This consequence is undoubtedly what the Irish statesman Edmund Burke had in mind when he remarked that “[f]ree trade is not based on utility but on justice.” If President Trump seeks fair trade policies from the rest of the world, the surest way to do so is by championing a policy of expanding free trade that avoids the consequence of Americans having to pay higher prices for items they use every day.
On that note, the discussion of trade at the summit was also notable for rousing the familiar question of where members of Congress are as the president once again took the lead on trade discussions.
Responding to President Trump’s announcement of forthcoming tariffs, Senator Bob Corker (R-TN) has found himself at the center of the debate by introducing a bill to reclaim Congressional authority on trade. The bill, which would make the levying of tariffs subject to Congressional approval, is an encouraging sign both for American consumers and for Congress to reclaim power that has been gradually ceded to the Executive Branch.
Despite Senate Majority Leader Mitch McConnell’s pronouncement that “we’re not going to be, in the Senate, passing a bill preventing the president from what he can legally do under current law,” Sen. Corker has continued to push the issue by introducing the bill as an amendment on the recent National Defense Authorization Act (NDAA), though he was unable to secure a vote on the amendment.
Sen Corker argues that “[Senators are] taking, rightly so, the responsibilities that we have to deal with tariffs and revenues” because it allows such measures to be discussed and voted on by Congress as opposed to being decided on a whim by the Executive Branch. Congress has the power to rein in the authority of the president to unilaterally impose tariffs and allow the costs a trade war would impose on American consumers to be publicly debated.
The aftermath of the G7 summit provides the latest example of why no one ‘wins’ a trade war and how Congress can use this occasion to reassert its Article I power and reclaim its authority on trade policy. The retaliatory nature of trade wars have a negative and direct impact on the consumers of all countries involved, and the Corker bill puts Congress on the spot to whether they want to reclaim its role as the foremost authority on trade.
