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Competing Visions on Tariff Authority in New Legislation

Monday, January 28, 2019
Sandler, Travis & Rosenberg Trade Report

Legislation introduced recently in the House and Senate offers competing visions of the authority the White House should have to increase import tariffs. Meanwhile, another bill would use the revenue from such tariffs to fund border security measures in an effort to end an impasse that contributed to the federal government shutdown.

Under the U.S. Reciprocal Trade Act (H.R. 764, introduced Jan. 24 by Rep. Duffy, R-Wis.), if the president determines that (a) a foreign country’s duty rate on a particular good from the U.S. is significantly higher than the U.S. duty on that good from that country or (b) the non-tariff barriers applied by a foreign country on a particular good from the U.S. impose significantly higher burdens than similar measures imposed by the U.S. on that good from that country, the president could negotiate an agreement to lower the duty or barrier at issue and/or raise tariffs on that good from that country in a reciprocal amount. If the country further increased its applicable tariff in response to any such action, the president could respond in kind.

The bill would grant this authority for three years, with a possible three-year extension if the president requests it. However, before taking any such action the president would have to provide notice to, and consult with, the House Ways and Means and Senate Finance committees as well as publish notice in the Federal Register and allow public comment. In addition, any such action would be terminated if Congress enacted a resolution of disapproval.

Conversely, the Global Trade Accountability Act (H.R. 723, introduced Jan. 23 by Rep. Davidson, R-Ohio) would subject executive branch trade restrictions such as tariffs, duties, and quotas to congressional approval and thus “restore congressional responsibility for reinforcing, improving, and approving trade policy.” Davidson said he supports President Trump’s priority on “fixing the broken trade deals” but indicated disapproval with some of the measures Trump has taken to do so, saying instead that he supports “targeted economic sanctions against bad actors” and believes that “any trade practices need to have a free trade outcome.”

In the meantime, the Border, Law Enforcement, Operational Control, and Sovereignty Act (S. 188, introduced Jan. 17 by Sen. Hyde-Smith, R-Miss.) would use revenues from tariffs on imports from China to fund border security measures with the intent of ending an impasse on that issue underlying the government shutdown. Specifically, this bill would direct 50 percent of the additional annual revenue associated with three rounds of Section 301 additional tariffs on imports from China to the Department of Homeland Security to fulfill the requirements of a 1996 law requiring the construction of reinforced fencing along at least 700 miles of the U.S.-Mexico border as well as the installation of additional physical barriers, roads, lighting, cameras, and sensors.

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