Business Groups Line Up Behind Limits to Trump's Tariff Powers

(Bloomberg) -- After failing to stop Donald Trump from unleashing tariffs on national security grounds, the U.S. business community is lining up behind efforts to limit his power to impose them.

The U.S. Chamber of Commerce, Business Roundtable, and two coalitions with dozens of trade associations are backing legislation to require congressional approval before a president imposes such national-security tariffs. Trump used the authority in 2018 to slap duties on steel and aluminum imports, and he’s been threatening for months to do the same with foreign-made vehicles and parts.

Similar legislation didn’t advance last year, and it’s unclear what the prospects are with the new Congress. But the business groups say Trump’s metals tariffs and retaliatory duties which came in response have hurt U.S. industry, farmers and workers -- and that it’s time to assert Congress’ constitutional role in trade policy.

“The support of such a broad cross-section of industry, agriculture and retail groups says a lot about how harmful steel and aluminum tariffs have been,’’ said Rufus Yerxa, president of the National Foreign Trade Council, which is helping lead an alliance of trade groups opposing the duties. “Tariffs based on national security are misguided and the policy needs to be changed so that companies across the country can start to recover.”

Steel and Aluminum

Trump relied on Section 232 of the Trade Expansion Act to impose duties on imports of steel and aluminum from most countries -- including Canada, Mexico and other allies. He separately has imposed duties on $250 billion in Chinese imports in response to a trade imbalance and allegations of unfair trade practices. The Trump administration is making progress in trade talks with the Chinese government to defuse their trade war, but the outcome of negotiations remains uncertain.

Trade groups criticized using national security as justification for the metals duties, and they’re opposing Trump’s threats to impose tariffs of as much as 25 percent on foreign-made cars and auto parts. The Commerce Department has until Feb. 17 to deliver findings of an investigation to Trump.

The Bicameral Congressional Trade Authority Act introduced on Jan. 30 in the House and Senate would give Congress 60 days to approve any proposed trade actions under Section 232 of the law, and change the definition of “national security” with regards to tariffs. Similar efforts didn’t advance last year, and Republican Senator Pat Toomey of Pennsylvania, one of the bill’s sponsors, said he’s still trying to gauge support.

Harm and Good

Toomey said the measure is needed because responsibilities on trade policy have shifted from Congress to the executive branch, and the Trump administration has used the authority in a way it was never intended.

“As it happens, this use of 232 tariffs on steel and aluminum have done far more harm than good,’’ Toomey told reporters on Jan. 31.

While Trump has credited the tariffs with reviving the steel industry, U.S. importers have paid additional taxes on about $23 billion in steel imports and $17 billion in aluminum imports, Toomey’s office said.

Even though there are significant hurdles, including that Trump can veto anything that’s passed by Congress, this year’s effort has the advantage of being pushed in both chambers, with more co-sponsors and having more manufacturers and farmers speaking out, said Republican Representative Mike Gallagher of Wisconsin.

Tariffs Backers

“These are card-carrying, in many cases, Trump-supporting folks who want to give the president the benefit of the doubt but don’t want to get caught in the middle of a trade war,’’ said Gallagher, one of the bill’s sponsors.

Not all business groups support the effort, though. The Alliance for American Manufacturing, a coalition of domestic industry and the United Steelworkers, said in a statement that the bill will cost U.S. jobs and that “weakening the ability to push back against market-distorting, anti-competitive practices will only embolden the nations whose trade cheating puts our national security at risk.”

U.S. companies and business groups have been waging campaigns for months, without much success, to persuade the president that duties are a tax on American businesses and consumers, and the wrong way to approach trade disputes.

Despite efforts that have included airing television ads opposing the tariffs on “Fox & Friends,” the morning TV show the president is known to watch, Trump hasn’t backed down. In December the president declared on Twitter that he is “a Tariff Man’’ and that duties “will always be the best way to max out our economic power.’’

In conjunction with the introduction of the new legislation, the U.S. Chamber sent a letter to lawmakers backing it and urging them to co-sponsor, as did a group of associations opposed to the metal tariffs the Alliance for Competitive and Aluminum Trade and a coalition including the National Taxpayers Union and Americans for Prosperity. The Business Roundtable issued a statement saying unilateral tariff increases “put America’s competitiveness at risk.’’

The groups also plan meetings in the Capitol with members of key committees and others to promote the legislation and discuss a variety of other trade issues now brewing.

“It’s an all-hands-on-deck approach when it comes to urging the administration to achieve better trade deals without the use of tariffs,’’ said Bethany Aronhalt, a spokeswoman for the National Retail Federation.

©2019 Bloomberg L.P.