There Is Bipartisan Pushback on Universal 10% Tariff Idea
A former Senate Finance Committee chairman when Republicans were in the majority, a pro-trade Democrat on the House Ways and Means Committee, and that committee's trade subcommittee leaders all agree -- if a returned President Donald Trump imposed a global 10% tariff by executive order, Congress likely would step in to undo it.
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House Ways and Means Trade Subcommittee Chairman Rep. Adrian Smith, R-Neb., said he expects Congress would intervene if Trump took that action. "It's no secret that I'm not a fan of tariffs, but I also think we should keep all options on the table," he said in a hallway interview at the Capitol Sept. 19.
Sen. Chuck Grassley, R-Iowa, told International Trade Today during a phone call with reporters earlier that day that he probably agreed with 90% of Trump's policies when he was in office, but trade is an area they disagreed on.
Grassley said, "I tried to explain to him how Smoot-Hawley, in 1930 passing, raised tariffs tremendously high and the United States is the one that raised it, but the rest of the world raised [tariffs too]. It sent the entire globe into recession. And not only that, for the whole 1930s, the economy was bad. And obviously, the economy of Germany was bad, and it brought Hitler to power. You end up with World War II, and you end up with 60 million people dying. So, I think you oughta look at history, and learn from history."
Tariffs before Smoot-Hawley were much higher than today -- about 36% on average -- and the law, in which Congress set tariff rates product by product, raised them again. Sugar was most protected, at 77%, textiles and apparel ranged from 46% to almost 60%, dishes and glassware at almost 54%, alcohol at 47%, metals and agricultural products, both at 35%. The agriculture tariffs were increased most sharply, going up more than 12 percentage points, though several other categories' tariffs were hiked about 10 percentage points -- including wool apparel, liquor and wine, and sugar.
Grassley said agriculture needs lower tariffs, because its reliance on exports makes it particularly vulnerable to retaliation.
"Particularly in agriculture, you try to reduce tariffs, because we produce a third more than we consume domestically, so we export it. And he found he was hurting farmers as a result of [tariff hikes on China], so he takes $28 billion, and gives it to the farmers to offset the tariffs. Now isn't that a crazy thing to be doing? I want free trade agreements! I want to reduce tariffs, not increase tariffs."
Grassley said he doesn't take a position on who the nominee should be, but he is assuming Trump will be the Republican nominee, and he expressed confidence that the next president will be a Republican.
When asked if Congress could intervene if Trump did hike tariffs globally, Grassley noted that he supported a bill that would clarify that the International Emergency Economic Powers Act, or IEEPA, couldn't be used to hike tariffs or impose quotas. The bill passed out of the Homeland Security Committee in 2019, after Trump threatened to hike tariffs on Mexican exports over migration issues, and was expected to use IEEPA to do so. It had bipartisan sponsorship.
"I don't want them to have this much emergency power, or power to impose tariffs," Grassley said of future presidents.
Ways and Means Committee member Rep. Don Beyer, D-Va., said that if Trump were to hike tariffs globally by 10%, "that would be the most economically disastrous, even stupid thing, I can remember. Just what it would do to inflation. Things would be 10% more expensive. It destroys our leadership position in the world. We have done a really wonderful job over the last 60 years of lifting up [economically] billions of people across the planet. And this would reverse all that. Make the world a much poorer place."
He called it "silly" and pooh-poohed that it would spur manufacturing hiring. Would Congress undo such an action? "I sure hope so," he said.
The top Democrat on the House Ways and Means trade subcommittee, Rep. Earl Blumenauer, D-Ore., said he thinks it's likely Congress would vote to stop the hike, adding: "But I think he's not likely to be re-elected, and he wouldn't, I think, be able to move it forward anyway. I think it's a very remote possibility. It's one of the things he specializes in, to change the subject, and get people spun up."
Trump first brought up the idea as part of his general protectionist stance, but according to recent reporting in the Washington Post, his advisers are talking about using the revenue the tariffs would bring in to balance further income tax cuts, for both individuals and companies.