The Intention to Limit The Us President’s Ability to Use National Security as a Defense When Creating Tariffs

Donald Trump’s trade policies have shocked the world, polarizing commentators, business leaders and regular citizens both domestically and abroad. This has resulted in the delivery of a letter to the US senate, employing them to limit the president’s ability to use national security as a defense when creating tariffs. This essay will firstly describe and analyze who has participated in the writing of this letter and what they are asking for. Secondly, it will explore why these parties are so invested in the limiting of the president’s power. Thirdly, it will discuss the effects of their efforts. Finally, it will explore which international relations model the current US economic situation mostly validates. These points will be followed by a short concluding section.

The size and span of the president’s tariffs and the potential for retaliation by other countries, have created the potential for an international trade war. Though the president has described trade wars as being, "good, and easy to win", his actions have created a long list of invested parties with much to gain from limiting the president’s ability to impose tariffs without congressional approval.

51 trade groups and 222 state and local chambers of commerce have signed a letter to US senators in support of a bill that would force the president to seek congressional approval before imposing new tariffs when citing national security concerns. Essentially removing the president's ability to unilaterally impose tariffs either punitively or emotively when claiming they will enhance national security. The letter states that “we are deeply concerned that the President’s unrestricted use of section 232 to impose tariffs may not be in the national interest”. The signatories included the National Retail Federation, the Alliance of Automobile Manufacturers, the American Apparel & Footwear Association and the Computer and Communications Industry Association to name a few.

The letter was in direct response to firstly, presidents March 1st announcement of the imposition of 25% and 10% tariffs on steel and aluminum imports which the administration claimed were damaging the local industries critical to national defense. Secondly, the March 22nd imposition of tariffs on $50 billion of Chinese goods, which was later extended by an additional $200 billion on September 18th. “While the president should still have this type of authority, the current circumstances highlight the need for Congress to ensure that the authority will be used, as intended by the Congress, in the overall national interest”.

Upon reflection, it is clear the listed groups supporting this letter pay little attention to the national security concerns cited by the administration when justifying these tariffs. Irrespective of whether the tariffs in fact protect US national security, the letter only refers to “the national interest”, a term which is both broad, subjective and remains undefined. Though the assertion is made that section 232 was intended to be used in the “overall national interest”, the only negative implications outlined in the letter are economic. There is no assertion that the tariffs are not in the interest of national security. However, there is the implied assertion that any action that fails to maximize economic growth, is not in the ‘national interest’, regardless of the (potential) cost to national security.

The letter is thus challenging the senate to rethink how national interest is defined, and encouraging them to weight private/corporate economic success more heavily within this definition.

On the surface it may look as though tariffs will be good for the US. It will remove the locational advantages of foreign firms and protect the US’s steel and aliluminim industries from degradation due to Chinese competition. But there are clear reasons why these tariffs impair US domestic firms, thus providing incentives for them to endorse political change.

The letter states that “It is now also increasingly clear that the way the steel and aluminum tariffs have been used will result in retaliatory tariffs from our largest trading partners and closest allies, and that retaliation will have serious negative economic impacts on the United States”. A sentiment backed up by Moor Insights & Strategy who warned that retaliation by China “could be fairly devastating” in the long term to US manufacturing companies in particular. Originally the EU, Canada, Mexico, Australia, Argentina, Brazil and South Korea were exempt. But in May, it was announced Canada, Mexico and the EU would still be subject to the tariffs. Not only is the imposition of tariffs on some, but not all trading partners breaking the US’s commitment not to discriminate among W.T.O. members, but it is also in direct contravention to the commitments made in 1995 by the US to eliminate steel tariffs and lower aluminum tariffs to below 5%, in exchange for reciprocity by other nations. China has subsequently placed tariffs on American exports of nuts, fruits, wine, pork and steel pipes while the EU is placing tariffs on a variety of US products including motorcycles, jeans and whiskey in response, adding tremendous chaos to the trading system.

US firms engaged in international business are losing opportunities because of US foreign policy. The reversion of the US economy to a more closed and insular form, is increasing costs for firms as imported components and materials become subject to tariffs. Though the size of the US and its potential for self-reliance may limit price rises, US firms exporting face further barriers, as individual nations and trading blocs like the EU impose retaliatory tariffs on US exports. Iconic US firms like Harley Davidson and Mid-Continent Nail have either already announced their intention to shift production overseas to avoid tariffs, or are laying off staff, claiming that they are being left with no choice as their profit margins shrink. American companies have an interest in the US economy staying open. They want to grow profit margins and maximize their consumer base through an economy that is conducive to investment, growth and free flowing capital

This attempt to reshape policy makers opinions of the US’s economic position is of paramount importance to firms engaged in international business. Without the support of the US government in ensuring and securing business opportunities, US firms will increasingly find themselves at a disadvantage when doing business internationally.

Effects of their efforts

The overall impact that this letter, and the general disapproval of the business community, will have on the administrations open endorsements of protectionist policies is unclear.

If Trump’s tariffs are in fact strengthening the national security of the US, then it is unlikely the proposed law change would limit his ability to create tariffs, as congress would simply agree and approve them. It is even more unlikely, given the republican majority, that Congress would redact trumps current tariffs through retrospective legislation.

Yet interestingly, auto production in the United States has more than doubled since 2009, and imports of Chinese steel have fallen by nearly 75 percent since their 2014 peak. More importantly, demand for steel and aliminium for defense makes up only 3% and 10% of domestic output respectively. This could suggest that Trump’s priorities are not strictly national security related. Especially when considered in conjunction with Trumps lack of regard towards alleged intellectual property theft by the Chinese government, and his reversal of a Commerce Department ban on American companies doing business with ZTE, a Chinese tech giant. The Pentagon warned ZTE brought “unacceptable risk” to the US the same month the British government cautioned that using ZTE equipment was a “national security concern”. Trump’s willingness to cut a deal with ZTE shows his willingness to ignore national security advice in pursuit of larger trade agreements with China.

Steel is vital to national defense. Harry Truman’s 1952 seizure of steel production facilities, ensuring supply for a vulnerable wartime economy during the Korean war demonstrates this. However, Trump’s attitude towards national security in differing contexts, suggests his tariffs are focused more on pleasing his voter base than on national security. Mercantilist temperaments reside amongst many of his supporters, who see foreign imports as an encroachment on national sovereignty and demand protectionist policy as a response. His actions appear to be contributing to rising approval ratings, even in the states which are most at risk economically from tariffs. This illustrates an environment in which the administration will likely continue to push for economic protectionism, irrespective of Trumps ability to impose tariffs personally. Though the letter may be a catalyst for discussion about the negative effects of tariffs on the US economy, the chances of swaying a republican congress, to moderate the policy of a republican administration, are low. Particularly when these policies are so popular amongst voters.

Without further enhancing public support amongst congress member’s constituencies, the business communities efforts to lobby for open markets will likely continue to struggle to gain traction .Title: globalism or realism.

The economic belligerence of the US in defense of her interests may look like an endorsement for the ‘realist’ perspective on international relations.

The more one agrees with the administration's claims that the US’s national security is being threatened, the more one can appreciate the competition between the US and China and how it threatens the US. China controls 50% of the world’s steel production through its multi-nationals. China is using its firms, many of which are state owned, to buy up strategic resources essential to military expansion. China is using its firms as a means to enhance its strategic position relative to its competitors in a zero sum game where her gains are her adversaries losses. Essentially using firms as weapons. The US administration is worried that if the US steel industry were to die, then the US would have its capacity to wage war diminished.

Yet if we agree that the US’s national security is threatened, as addressed in the first paragraph, the collective authors of this letter still show these threats little concern. Again, this is demonstrated firstly through the abstention of acknowledgements of these concerns in the letter, and secondly, through the letters implied contention that firms economic success is more important than national security. The US firms which have been negatively affected by the tariffs, therefore, cannot be extensions of the ambitions and strategic objectives of the US because they are actively engaged in undermining them. Hence they are autonomous, independent and pursuing their own objectives. However, the inability of these large firms, acting in unison, to derail the forthcoming insularity of the US economy, clearly demonstrates corporations wielding only second tier levels of power relative to the states in which they reside. These are characteristics of the liberalist theory of international relations. The liberalist interpretation of international relations, like realism, characterizes states as self-interested, and as being the ‘biggest players’ within the international framework. The theory acknowledges the importance of multi-nationals in international relations, but recognizes them as autonomous, free thinking and free to pursue their own interests; unlike realism. Chinese state ownership of firms, by definition, means that these firms are extensions of the Chinese government. However, this willingness by Chinese multi-nationals to further their governments strategic objectives is an ‘exception to the rule’, rooted in the fundamental discrepancies between the ownership structures of Chinese and US firms. Liberalism contends that while there may be tension created through the self-interested nature of states, conflict can be avoided through the use of cultural or economic tools rather than war. Adam Smith recognized the power of tariffs as an economic tool arguing “They can ensure a level playing ground amongst merchants of different nations”.

Thus the circumstances outlined in this essay support the liberalist interpretation of international relations.

In conclusion, Donald Trump’s trade policies have resulted in the delivery of a letter to the US senate, employing them to limit the president’s ability to create tariffs. This essay has firstly described and analyzed who has participated in writing this letter and what they desire. Secondly, it has explored the reasons behind the interests of these parties in limiting the president’s power. Thirdly, it has discussed the effects of their efforts. Finally, it has explored and explained why the current circumstances validate the liberalistic theory of international relations the most. The international political and economic landscape today is more complicated than ever. As states move to protect their national interests multi-nationals will continue to be caught in-between and must continue to be politically active to protect their private economic interests.