By Steve Levy
The Supreme Court striking down President Trump‘s across-the-board tariffs was no surprise to us. We wrote months ago that his actions were not supported by law.
The Constitution is clear: Tariffs fall under the purview of Congress
Trump saw then-President Obama getting away with illegal actions such as DACA and then-President Biden playing games with student loans, so he figured, “What the heck, I might as well play this game as well.”
Despite his going about tariffs in an improper fashion, the question remains as to whether tariffs are a good idea in the first place.
There is a tendency for many who are virulently anti-Trump to take the position that tariffs are a bad thing simply because they’re promoted by the orange man they so despise.
Hypocrisy on the Right and the Left
But what’s ironic is that the same leftists who have been bashing tariffs since Trump proposed them were, in years past, the strongest proponents for instilling these tariffs to help bolster middle- and working-class employees in manufacturing and their union constituencies here at home.
Inconsistencies were evident as well with the many Republicans who had for years bashed the idea of tariffs, but sat silently as their Republican president promoted them.
The Tariff Issue Is Nuanced
The question of tariffs is far more nuanced than either of these two extremes.
In a perfect and fair world, we would adopt the Adam Smith Wealth of Nations approach that free trade is the best way to go. Prohibiting the interference on trade and allowing the cheapest goods to flow into the market would benefit all.
Perhaps. But we don’t live in that make-believe world.
We live in a world where some nations impose protective tariffs, while others are more lax. And, of course, it’s been the United States that has been the most lax when it comes to allowing foreign goods to enter its shores.
The U.S. Was at a Disadvantage
Bill Clinton ushered in the age of globalization and gave China most-favored-nation status.
Amazingly, China, the second-largest economy in the world, is still classified by the World Trade Organization as a “developing” country that is entitled to be protectionist.
This is lunacy and President Trump was the one president willing to rightfully point it out.
Our Manufacturing Industry Was Gutted
This lopsided disparity between high and low tariffs from one country to another gutted the American industrial manufacturing industry.
Trump was absolutely justified in calling out the fact that BMWs and Hondas could flow freely into America to be sold to our consumers, but Fords and Chevys were denied access to Germany and Japan.
Why did this happen? Because we allowed it to.
So there is good reason for a president to change this trajectory. The problem is that Trump went about it the wrong way
Bessent vs. Navarro
There were two camps within the Trump administration when it came to tariffs. One was promoted by Treasury Secretary Scott Bessent, and the other was advocated by Peter Navarro.
Navarro has done America a tremendous service by being the point man in Trump‘s first administration who sounded the alarm that China is not our friend and we must start decoupling from them. He was especially angered by the gutting of working and middle-class jobs in the Rust Belt as jobs were shipped overseas due to a lack of U.S. tariff reciprocity.
His goal to bring back America’s manufacturing base is a noble one, but his way of accomplishing it is not realistic.
Navarro wanted across-the-board tariffs, making imports more expensive, thereby encouraging American manufacturers to rebuild. The higher cost we would pay at the checkout counter would be more than offset by the boom to the economy with the thriving industrial base and the increase in jobs and wages that would come about from a new manufacturing renaissance in America.
Sounds good, but it’s highly unrealistic given that labor laws, environmental regulations and red tape are still so high in America that low-cost production here is unlikely.
National Security Concerns
But there are instances, especially where national security is concerned, where it shouldn’t matter. Trump was right in sounding the alarm that we cannot remain dependent on our adversaries for needed military hardware, computer chips, or life-saving pharmaceuticals. The production of steel is another area where we cannot be dependent on foreign nations.
So, a targeted set of tariffs would be a good thing, especially on those nations such as India, which has blocked U.S. motorcycles from being sold there.
And that’s where Bessent’s idea for targeted tariffs comes into play. Had Bessent prevailed on Trump’s ultimate policy, we would be in a much better place.
Specifically targeted tariffs could’ve been implemented on a gradual, one-nation-at-a-time basis. It wouldn’t have spooked businesses as did Trump‘s initial plan. And it would also have been far less likely to be thrown out on constitutional grounds.
The Supreme Court notes that, where national emergencies are concerned, the president does have more leeway. But how can the president claim that there’s a national emergency when he’s implementing across-the-board tariffs on every country? It undercuts his own argument.
A specific tariff against China, our political and economic adversary, would be much more likely to withstand constitutional muster
So the Supreme Court has introduced a needed course correction.
Executive Leeway Needed for Leverage
We think it’s important for the president to have some leeway with tariffs. They proved to be tremendous leverage for him and indeed have even been used to help stop wars overseas. But they have to be done logically and within the parameters of the law.
Don’t throw the baby out with the bathwater. When it comes to tariff infringements, the answer is to mend them, don’t end them.
Let’s not go back to the pre-Trump era where we were taken advantage of by many countries around the world simply because we wanted the lowest prices possible on our imports at the expense of our ability to export.
Tariffs can be useful if they’re targeted and done on a gradual basis. Let’s hope that lawmakers on both sides of the aisle come to realize that.