Q&A on China Trade With R Street Institute’s Clark Packard
President Donald Trump’s decision to boost tariffs on Chinese goods from 10 to 25 percent last month has set off a new round of hand-wringing by conservative free-traders. Clark Packard, a trade policy counsel at the R Street Institute, a right-leaning think tank, wrote in Foreign Policy magazine that Congress needs to reclaim its power over tariffs. He joined CQ Magazine Deputy Editor Shawn Zeller on the May 10 “CQ on Congress” podcast. An edited transcript follows.
Q. Clark, you warned of grave consequences if Congress doesn’t act to rein in the president’s power over tariffs. What kind of consequences are you talking about?
A. What you will see is higher prices for consumers, both families and individual firms that are reliant on imports. You’ll see complicated supply chains uprooted. You will see angered allies. This really has the potential to spiral out of control.
Q. You note that the Constitution actually gives Congress the power over tariffs, but what’s to say Congress would use that power more wisely than the president?
A. I think that’s the major question. How do you retain some of this authority that the Constitution grants to Congress without creating the institutional dynamics that led to the Smoot-Hawley tariff that exacerbated the Great Depression?
Thankfully, members of Congress have put forward thoughtful approaches to do this, one of which would basically say that if the president wants to impose tariffs, Congress would have to approve them. Sens. [Patrick] Toomey from Pennsylvania and [Mark] Warner from Virginia have proposed a bipartisan bill that would restrict the president’s national security powers to raise tariffs and subject those to congressional approval before they could go into effect. It would take away from the Commerce Department the decision on national security tariffs and give it to the Defense Department.
Q. Would Defense make wiser decisions?
A. I think frankly the Department of Commerce is a swampy factory of crony capitalism and a lot of folks on the center-right think it’s working for the business interests, as opposed to the consumer interest or the national security interest. And so I think that the Department of Defense is better suited to make determinations on whether or not something impacts the national security of the country.
Q. Nonetheless, the courts have upheld Trump’s imposition of steel and aluminum tariffs on national security grounds. Doesn’t that indicate he has an argument?
A. Our court system has generally been fairly deferential on claims of national security. They don’t want to impinge on the authority of the president, but the case that was decided at the U.S. Court of International Trade back in March was a 2-to-1 decision and the dissent basically said, ‘I don’t see the national security nexus here.”
Q. The Chinese have imposed tariffs on American agricultural exports in retaliation. That’s hurt Republican districts. Are you surprised Republicans in Congress haven’t pushed back more?
A. Not really, frankly. There seems to be a bipartisan, emerging consensus that China really does engage in questionable trade policy practices.
I would point back to Robert Lighthizer, the U.S. trade representative, who testified before the Ways and Means Committee in late March and not one single Republican asked a really thoughtful question about how to manage China. It was all basically “rah-rah, who-can-out-hawk-whom” on the committee.
Q. So, if not Trump’s approach to China, what should replace it?
A. I think that China poses very serious problems, between intellectual property abuse and theft, forced technology transfer, and cyberintrusions into commercial businesses and also massive state-owned subsidies to massive state-owned enterprises. I just don’t think tariffs are the answer to that.
I think it’s a multi-pronged, multi-faceted approach that the United States should be embracing and I don’t think that the administration really grasps the gravity of this situation and it’s not something that’s going to be solved over the next five months or five years even. This is a 10-, 15-, 25-year long process.
Q. The president also says that the tariffs have brought in a lot of revenue. Isn’t that beneficial for the United States?
A. No, there have been two very serious academic studies that looked at this. One from the New York Fed came out and said 100 percent of that is being passed along to U.S. consumers.
So when the president goes out and says, ‘No, it’s Chinese exporters that are paying this,’ that’s false. It’s the United States consumer that’s bearing the brunt of the tariffs.
