Major U.S. Congressional Actions in 2018 – Trade
Section 232 Tariffs Implemented
- In March, President Trump announced “national security” tariffs of 10% on aluminum and 25% on steel imports from all countries.
- Argentina, Australia, Brazil, and South Korea were exempted from the tariffs indefinitely after accepting quota demands.
- Eight countries and the European Union have filed lawsuits through the World Trade Organization against the tariffs.
US-China Trade Dispute
- The Trump administration enacted Section 301 tariffs (unfair trade) against Chinese imported goods.
- The U.S. and China have announced a number of retaliatory tariffs on billions of dollars worth of goods.
- President Trump and Chinese President Xi met at the G20 Summit and agreed to delay scheduled tariff increases, but a larger deal was not reached.
- President Trump pledged to repeal or renegotiate the terms of NAFTA in January 2017.
- In September 2018, the U.S., Mexico, and Canada reached the terms of a new deal to replace NAFTA, called the United States-Mexico-Canada Agreement (USMCA).
- President Trump must return the new deal to Congress for approval before it comes into law.
“Tariffs are working big time. Every country on earth wants to take wealth out of the US, always to our detriment. I say, as they come, tax them.” — President Trump
Sources: National Journal research, 2018; “Trump Says the US Now Has the Upper Hand on China in the Tariff Battle,” Fortune. August 5, 2018; “Timeline of the Escalating US-China Trade Dispute,” Bloomberg, May 3, 2018.
Status of President Trump’s major trade actions
Source: National Journal Research, 2018.
Potential 2019 trade agenda items for Congress
Congressional Approval of USMCA
- The USMCA will update the 24-year-old NAFTA and includes changes such as an increase in dairy trade from the U.S. to Canada and increases in the percentage of car parts produced in North America to avoid tariffs.
- The USMCA will come before the House and Senate for a vote. The Democratic House is expected to push back against the administration on various provisions of the deal.
Increased Oversight of the Trump Administration
- Following the midterm elections, Rep. Joaquin Castro (D-TX) said that he wants House Democrats to investigate the growing trade war with China.
- The Democratic House will have subpoena power to call officials before Congress to testify and defend the administration’s trade policies.
“I and many of my colleagues have called for higher standards in a revised NAFTA, or USMCA. A continuing concern remains stronger enforcement mechanisms, particularly in the areas of labor and the environment.” — Incoming Ways and Means Trade Subcommittee Chair Bill Pascrell (D-NJ)
Sources: Shawn Donnan, Andrew Mayeda, Jenny Leonard, and Jeremy C.F. Lin, “Trump’s ‘Historic’ Trade Deal: How Different Is It From NAFTA?” Bloomberg. October 2, 2018; Robert Holleyman, Melissa Morris, Joshua Boswell, Jing Jing Zhang, and Evan Yu, “2018 Midterm Elections Update: Impact on US Trade Policy,” Corwell Moring. November 7, 2018; Alex Ward, “Democrats won the House – and Trump’s foreign policy may be in trouble,” Vox. November 7, 2018.
Overview: The Process of Passing USMCA (New NAFTA)
Congress gave the president power to negotiate trade deals without interference through the TPA (Trade Promotion Authority), which it renewed in 2018. Once the administration submits a trade deal for approval, Congress must hold an “up or down” vote without amendments and with no filibusters.
Sources: Megan Cassella, “NAFTA 2.0’s long road to completion,” Politico, updated October 1, 2018; Kimberly Amadeo, “Trade Promotion Authority, Its Pros, Cons and History,” The Balance, August 28, 2018; Brian Bradley, “Senator: Tariffs complicate USMCA prospects,” American Shipper, October 24, 2018.
Potential Legislation Reintroduced in 2019 Would Give Congress More Oversight Over Presidential Trade Actions
H.R. 6337/S. 3013: To Amend the Trade Expansion Act of 1962
- House sponsor: Rep. Mike Gallagher (R-WI) with 23 cosponsors.
- Senate sponsor: Sen. Bob Corker (R-TN) with 16 cosponsors.
- Would require congressional approval before the president can apply Section 232 (national security) tariffs.
3329: Trade Security Act of 2018
- Sponsored by Sen. Rob Portman (R-OH) with six cosponsors.
- Amends Section 232 of the Trade Expansion Act of 1962 to require the Secretary of Defense to initiate investigations and provide for congressional disapproval.
H.R. 6923: Promoting Responsible and Free Trade Act
- Sponsored by Rep. Mark Sanford (R-SC) with one cosponsor.
- Requires congressional approval for trade remedies, including actions on positive adjustments to import competition and actions safeguarding national security.
“Tariffs are taxes on American consumers. They hurt American workers, families, and employers. Imposing them under the false pretense of ‘national security’ weakens our economy, our credibility with other nations, and invites retaliation.” — Rep. Pat Toomey (R-PA)
Source: Congress.gov; National Journal Research, 2018.
Potential 2019 Trade Agenda Items for the Trump Administration
USMCA Negotiations with Congress
- President Trump must send the USMCA to Congress for approval, and the Democratic House could force him to renegotiate certain portions.
- Some House Democrats have expressed skepticism over provisions regarding the environment and labor, which may impede President Trump’s ability to pass the deal as it is currently.
Trade Negotiations with Japan, the UK, and the EU
- United States Trade Representative Robert Lighthizer announced that the U.S. will begin three separate trade negotiations with Japan, the UK, and the EU in order to achieve “free, fair, and reciprocal trade.”
- The negotiations will not begin until 2019, and the trade negotiations with the UK will wait until Brexit negotiations are finalized.
- President Trump has been adamant about adding tariffs to European and Asian auto imports but has not formally announced tariffs.
- President Trump and Chinese President Xi discussed the trade dispute between the U.S. and China, but investors fear that tariffs will increase as no major breakthroughs have been reached.
“We need an open market or a more open market, more access by American companies. We need protection of intellectual property. We need to stop cybertheft. We need to stop forced technology transfer.” — US Trade Representative Robert Lighthizer
Sources: “US moves to negotiate trade deals with Japan, UK, EU,” BBC. October 17, 2018; ”US Trade Representative Robert Lighthizer Discusses Trade Issues With China,” NPR. December 7, 2018.