U.S. to Lift Tariffs against Ukraine for One Year: China Next?

In 2018, President Trump enacted a 25 percent tariff on Ukrainian steel, on what he claimed were national security grounds. They remained in place throughout Trump’s subsequent (and unrelated) Ukraine drama over withheld military aid. President Biden left the Ukraine tariffs in place even as he undid other Trump administration policies. They even stayed in place for more than two months after Vladimir Putin invaded Ukraine. Now the Biden administration finally announced it will lift the tariffs—but only for one year. Possible relief on the China tariffs may also be on the way.

America’s trade policy is overdue for a course correction, but the Ukraine liberalization is one of the smallest possible trade actions possible. Ukraine is only America’s 12th-largest source of steel imports. It will have only a small positive effect on steel prices in the U.S., which are currently the world’s highest, due in large part to the Section 232 metal tariffs, of which the Ukraine tariffs are a part—but it’s a start.

Tariffs are what we seek to do to our enemies during wartime. There is no good reason to impose them on allies—especially they are attacked by a common enemy. The Ukraine tariffs are an obvious example that is hopefully raising an outcry for further action. The Biden administration should also remove other tariffs against allies such as the United Kingdom, Europe, and others. In addition to the economic benefits for everyone involved, trade liberalization would strengthen diplomatic efforts in countering Russian and Chinese geopolitical influence.

It’s not just allies—tariffs are also ineffective against rivals. China, which will be the next big trade issue to come up on the agenda, is a case in point. President Trump’s China tariffs are required by law to expire after four years unless they get renewed.

U.S. Trade Representative Katherine Tai is pushing for President Biden to extend them, even though the tariffs are raising consumer prices on thousands of goods above what inflation is already doing (inflation is a separate issue that concerns the money supply, not trade).

Tai still believes in a “tariffs as leverage” theory, even though four rounds of tariffs plus the Phase One agreement failed to net a single substantive reform from Beijing; the real world has a lesser opinion of the leverage theory than Tai does. It is telling that among her few allies on the leverage theory are Trump officials such as her predecessor, Robert Lighthizer.

What should Congress do? In the short term, it should repeal as many tariffs as possible. During an election year where inflation is the top issue, tariff relief would lower prices on all manner of goods (though, again, inflation is a monetary, not trade, issue).

In the longer term, presidents should not be able to enact tariffs by themselves. In our system of government, taxing authority belongs to Congress. Congress should repeal Section 232 of the 1962 Trade Expansion Act, which delegated some of that authority away. Under Section 232, presidents may enact tariffs without Congress, so long as they cite national security reasons. The Ukrainian steel tariffs are Section 232 tariffs.

Congress should also repeal Sections 201 and 301 of the 1974 Trade Act, which give the president similar unilateral tariff-making authority on competitiveness or treaty violation grounds. The China tariffs were enacted under Section 301. Repealing these would mean that no future president could abuse these powers again. They are harming American economic and diplomatic interests.

Repealing national security tariffs against Ukraine, of all countries, is low-hanging fruit. There is much more waiting to be picked. We found out—the hard way—that tariffs provide no leverage in convincing Beijing to reform its unfair trade policies. It is time to cut our losses and move on to policies that work.

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