Donald Trump is asking for authority to raise tariffs at will, in violation of the Constitution and World Trade Organization rules. His Administration has drafted the “United States Fair and Reciprocal Tariff Act” (US FART) Act, which would allow the President to set tariffs without Congressional consent and in violation of two key WTO principles:
- The “Most Favored Nation” (MFN) principle that countries can’t set different tariff rates for different countries outside of free trade agreements;
- “Bound tariff rates” — the tariff ceilings that each WTO country has already agreed to in previous negotiations [Jonathan Swan, “Exclusive: A Leaked Trump Bill to Blow Up the WTO,” Axios, 2018.07.01].
Swan’s source says US FART is “insane” and stands zero chance of passing Congress. We should hope so, since, as Tim Bjorkman points out, Congress needs to reassert its Article 1 Section 8 authority to regulate trade with foreign nations.
US FART would only intensify Trump’s kamikaze tariffism, which is already slowing down economic growth in the Midwest:
A new survey indicates the Midwest economy is still in expansion mode, but the growth is slowing due to trade and tariff concerns. Creighton University economic Ernie Goss surveys supply managers in nine states, including Iowa, and just issued his report for June.
…“These trade tensions that’s really a significant factor, particularly for Iowa and most of the eight other states that we survey simply because agriculture is in the cross-hairs of any trade tensions, tariffs, trade wars and that’s certainly having some impacts, according to our survey,” Goss says [O. Kay Henderson, “Creighton Professor’s Midwest Survey Shows Economic Growth, Tensions over Trade,” RadioIowa, 2018.07.02].
Trump hasn’t slowed down Molded Fiber Glass yet. After Senator John Thune salvaged the production tax credit that Trump and Noem would have more hastily demised, the Aberdeen manufacturer got an order for wind turbine blades that allowed the plant to stay open through this summer. Now they’ve received another order that will allow MFG to hire another 60 people above its current 380 workforce. (No word on who placed the order, but it’s a month earlier than my 2018 Blog Wish List story #3!)
The U.S. Chamber of Commerce is trying to keep Trump from doing more damage to America’s economy. Yesterday the Chamber released an analysis of the cost of Trump’s trade war for each state. By the Chamber’s figures, South Dakota could lose $129 million in tariffed exports:
- $86 million in meat usually shipped to Mexico;
- $28 million in manufactured goods usually shipped to Canada;
- $14 million in agricultural products usually shipped to China; and
- $904 thousand in manufactured goods usually shipped to Europe.
Tariff losses would be even worse in Nebraska ($327M), Minnesota ($498M), and Iowa ($977M). The Chamber’s data shows $59.4 billion in U.S. exports imperiled by the tariffs so far. Automakers contend the Trump tariffs could add $4,000 to $5,000 to the price of new car. U.S. tariffs alone may cause the U.S. auto industry to shed 195,000 jobs; full retaliation from our erstwhile trade partners and allies could drive those auto job losses to 624,000… and that’s before anything Trump’s US FART would impose.
So have we established yet that Donald Trump doesn’t care about anyone or anything—jobs, the Midwest, the Constitution, the global economy—other than himself?