President Biden is taking a small step toward tariff relief. Japan’s first 1.25 million metric tons per year of steel exports to the U.S. will now be tariff-free. This amount is roughly equal to its average steel exports to America over the last several years. Exports beyond that will still face tariffs of 25 percent.
On one hand, tariff reductions are good, and this week’s action mostly does away with tariffs on Japanese steel. On the other hand, good policy is simple, and this adds complexity. Regulators, producers, and buyers will have to spend resources tracking tonnage to avoid potential tariffs. The tariff on growth hurts steel-using industries still dealing with supply shortages and price increases. Steel tariffs against most of the world will also remain in place, including against allies. One of President Trump’s most harmful policies remains mostly intact. His tariffs, which are now also Biden’s tariffs, cost the average household more than $1,000 per year.
President Trump initially enacted 25 percent steel tariffs allegedly for national security reasons. Allies such as Canada, Europe, and Japan took issue with being labeled national security threats, which is still a source of diplomatic friction. But the national security justification is pretty obviously a fig leaf.
In order to raise tariffs without congressional authorization, President Trump cited Section 232 of the 1962 Trade Expansion Act, which requires the president to justify tariff increases on national security. But saying doesn’t make it so.
While President Biden deserves praise for this week’s minor tariff relief, it isn’t enough. He should lift all remaining Section 232 tariffs. But even that isn’t enough. The long-term fix is structural. Congress needs to repeal Section 232 outright, so neither Biden nor any future president can abuse his or her powers ever again. The 1974 Trade Act contains similar clauses in its Sections 201 and 301, which Trump used to unilaterally raise tariffs against Europe and China. Those should also be repealed. Taxing power properly belongs to Congress. The separation of powers is an important principle. While it is important for long-lasting trade reform, it is important to many other issues as well.
For more on institution-level trade reform, see my paper, “Repeal #NeverNeeded Trade Barriers.”