By james art Tariffs have become a huge issue in the presidential campaign. Last week, former President Trump recounted a phone conversation he had with French President Macron in 2019. France had just passed a digital tax imposed on those companies (mostly American ones like Amazon) that sell to customers in France over the internet. As President Trump said it, he called President Macron to say that in retaliation he, President Trump, would impose a 100% tariff on imported French wines – and Macron immediately backed down.
When Russia invaded Ukraine, President Biden asked Congress for permission to impose tariffs on all goods imported from Russia. Congress overwhelmingly approved giving this power to Biden; he used it and Russian imports fell by 50% in one year.
Tariffs can certainly act as a valuable threat in the nations’ bilateral negotiations, although the threat of selling less caviar to Americans was unlikely to soften Putin’s expansionist plans for Ukraine. (The loss of sales to French wine exporters caused by doubling the price of each bottle, however, was politically intolerable for Macron.)
Regardless, each case violated America’s promises under the World Trade Organization (“WTO”) treaty. The US, France and Russia are members of the WTO. As a member, America has agreed not to raise tariffs on another WTO member except under specific narrow circumstances, none of which apply. The one that came closest allows a tariff when imports challenge the survival of an industry important to American national security. Still, punishing Russia, not protecting a domestic industry vital to America’s security, was clearly the goal of Biden’s action.
Is it ever acceptable for America to knowingly violate its international trade agreements? If so, should Congress or the president make the decision?
The whole point of the WTO was to eliminate the tactic of threatening tariffs that could lead to trade wars. Trade wars do the most damage to a country that is targeted and does not retaliate. They do the next biggest damage to both countries involved in imposing ever higher tariffs on each other. They do the least damage when forced to give a proportionate response after a hearing before a WTO panel. However, President Trump and President Biden felt they had to act quickly to prevent a trade war (spurred by the threat of the French digital tax) or to stop the continuation of a real war (Ukraine).
France could challenge Trump’s wine tariffs at the WTO and probably win in the end, but Trump knew the pressure Macron would be under in the meantime. So he ignored the WTO. Biden probably didn’t care if Russia decided to go to the WTO. Such a hearing on the world stage would allow the US to present evidence of how Russia’s massive human rights abuses pose a threat to our own national security. We may end up losing this argument in favor of Russia, but Putin had no interest in bringing it up.
The second question focuses on the fact that Biden had Congress behind him and, while Trump may have, he didn’t ask. The US Constitution unequivocally gives Congress the power to “lay and collect taxes, duties, fees, and excises.” In the event of a declared emergency, Congress has given the President the power to block imports entirely, but Congress has not ceded its general tariff authority to the President. However, Trump’s threat to block all French wine imports to help Amazon would not be credible (American oenophiles would riot); but doubling the price of a bottle of French wine could actually win Trump votes (at least in Temecula) while making French wine even more luxurious. He still had to ask Congress for approval.
All nations sometimes break the commitments they have made to other nations. America must do this sparingly and constitutionally to maintain credibility in our word and encourage recourse to international dispute resolution.
Tom Campbell is a professor of law and economics at Chapman University. He taught international trade law at Stanford Law School, where he was a full professor. He served in the US Congress for five terms, including on the International Relations, Joint Economic and Judiciary Committees.
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