R Street Institute
R Sheets Finance and Trade

R Sheet on Section 232 Reform

by Philip Wallach AND James Wallner
Feb 19, 2019
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Authors

James Wallner
James Wallner
Former Resident Senior Fellow, Governance
Phil Wallach
Philip Wallach
Former Resident Senior Fellow, Governance

Key Points

Section 232 of the Trade Expansion Act of 1962 gives the president power to unilaterally adjust tariffs for the purpose of protecting national security.

In response to recent uses of Section 232 that seem unrelated to national security, members of Congress have proposed restructuring Section 232.

The two leading bills are currently the Trade Security Act (S. 365) and the Bicameral Congressional Trade Authority Act (S. 287).

S. 365 establishes a congressional review process that would provide for procedurally protected resolutions to counteract presidential actions under Section 232. The consideration of such resolutions would not be expedited and would still be subject to a presidential veto.

On the other hand, S. 287 would require all actions under Section 232 to receive congressional backing to become effective. This would significantly shift the balance of power between Congress and the president.

S. 287 also narrows the definition of national security and includes a mechanism to regulate the granting of exclusions.

BACKGROUND

Article I, Section 8, of the Constitution gives Congress the power to regulate trade. And for 150 years after ratification, Congress used these powers to set tariff rates for specific imports and to regulate international trade. But since the 1930s, Congress has generally delegated its trade powers to the president.

Indeed, the shift from an assertive to a deferential posture is underscored by the Trade Expansion Act of 1962 (TEA). Section 232 of the law delegates to the president the power to adjust tariff rates unilaterally if the Secretary of Commerce determines that a particular import harms national security. In practice, the law’s ambiguous definition of “national security” has empowered presidents to make rate adjustments for a variety of reasons. However, prior to 2018, no president had invoked Section 232 to restrict imports since 1986, when the Reagan administration negotiated voluntary export restraints for “metal cutting and metal forming machine tools” with leading foreign exporters.

Note: This version is updated to correct an error in the version posted on Feb. 19, 2019.

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