Trade, Redistribution, and the Imperial Presidency
12 Pages Posted: 19 Dec 2018
Date Written: December 7, 2018
In this essay, prepared for a symposium on International Trade in the Trump Era, I argue that one reason for President Trump's massive deployment of tariff authority is that the president, like any political officeholder, is beholden to those who put him in office — and who can keep him there. During his successful 2016 campaign, President Trump promised to help those regions of the United States that have lost significant manufacturing jobs, a trend that President Trump linked to trade agreements that have allowed cheap imports to supplant goods made in the United States. Since taking office, he has used the powers available to him to try to make good on his promises. In principle, the government has a wide range of policy instruments at its disposal to help those regions. An expansion of the Trade Adjustment Assistance program, which provides financial assistance to workers, farmers, and firms who have suffered due to trade liberalization, would help President Trump’s target constituency. Similarly, federal subsidies to help new industries, increased federal investment in primary research and infrastructure, and tax credits for businesses that relocate to economically ravaged regions would all help bring jobs back to the heartland. Such programs, however, require action — either to appropriate funds or to change existing law, like the tax code — by a Congress that is remarkably slow to act these days. Thus, like many presidential administrations before it, the Trump administration has searched for policies that advance its goals and that it can implement without Congress. The tariff power is an obvious candidate: Congress, as it turns out, has delegated almost total control over tariff rates to the president.
The fact that the president has turned to tariffs to effect redistribution should hardly come as a shock. Tariff reductions since the Second World War have created an enormous amount of wealth globally, but they have also had huge distributional impacts that have gone largely unaddressed. During that time, a bipartisan political consensus emerged that trade policy should maximize wealth, while distributional issues should be dealt with domestically. But Congress, a deliberative body facing substantial impediments to action, has declined to take forceful steps to address the distributional issues exacerbated by trade liberalization. The president, on the other hand, has substantial delegated authority over international trade policy and faces few obstacles to decisive action. It was only a matter of time before the country elected a president who would want to redistribute to the losers from trade and who would rely on his international trade authority to do so.
Keywords: tariffs, international trade, free trade, Trump, NAFTA, China, trade, redistribution, presidency, separation of powers
JEL Classification: K10, K33
Suggested Citation: Suggested Citation