| Treaties of Amity and Commerce*, 1789-1930 | 93 |
| Congressional tariff bills, 1789-1930 | 45 |
| Congressional trade negotiating authority bills, 1934-2015 | 19 |
| U.S. trade agreements related to tariffs,** 1934-2015 | 62 |
* A generic term; sometimes the actual titles were “Amity, Commerce, and Navigation,” “Friendship and Commerce,” etc.
** Counting RTAA agreements, GATT and WTO agreements, and Free Trade Agreements.
WHAT THEY MEAN:
Dire predictions from Mr. Trump, as the Supreme Court prepares to hear oral arguments on his “national emergency” tariff decrees next Wednesday:
“If this country is not allowed to have the President of the United States negotiate on behalf of it with tariffs, we are put in a position where we’re going to be a third-world country. … I think it’s the most important case that we’re going to have for many, many years to come.”
Last week’s antics suggest good reason to restrain presidents on this topic. Apparently to publicize his personal distress over an advertisement run by the Province of Ontario, Mr. Trump announced a plan to place 10% tariffs on everything Americans buy from Canada. (The ad ran during some baseball playoff games. It — accurately — replays parts of a 1987 radio address on tariffs and trade by the late President Ronald Reagan, including a pitch for duty-free U.S.-Canada trade.) If this actually happens, the effect would be a 10% tax (“surcharge” in the Treasury Secretary’s preferred usage) on all of Maine’s $2.5 billion heating oil supply this winter, half the fertilizer Kansans use in spring planting, auto parts for Midwest factories, etc.
Families now budgeting for January utility bills, and farmers and factory managers worried about rising costs, are likely better off without this sort of thing. Should Americans still worry, though, about the more abstract question of “presidents negotiating on tariffs with foreigners”? Not really. Some background on the case and the record of presidents and tariffs:
The Justices next week will hear the administration’s appeal of two tariff cases it lost this summer, V.O.S. Selections v. Trump and Learning Resources v. Trump. Both successfully challenged the use of the International Emergency Economic Powers Act (“IEEPA”) to declare “states of emergency” and overwrite the Congressionally authorized Harmonized Tariff Schedule with a new and ever-changing tariff system through a series of Executive Orders.
The basic question, then, is not about “whether presidents can negotiate on tariffs with foreigners,” but about the “separation of powers” within the United States — specifically, whether presidents can override Congress’ Constitutional authority to set rates for “Taxes, Duties, Imposts, and Excises” by using the IEEPA law to rule by decree. No previous president ever claimed a right to do that. Lots of them had tariff policies nonetheless, and often achieved what they wanted.
1789-1933: From the early republic to the Great Depression, Congress set tariff rates directly by passing bills. The U.S. International Trade Commission counted 42 such tariff laws between 1789 and 1916. Adding three more in 1921, 1922, and 1930 yields a total of 45. Presidents frequently influenced these bills: Polk and Wilson wanted low rates and got them through the “Walker” and “Underwood” tariffs; Harding and Hoover wanted high rates and likewise got them through the “Fordney-McCumber” and “Smoot-Hawley” bills. They didn’t negotiate these rates with foreign countries, though. Instead, they handled a complementary international job: As Congress set rates, presidents negotiated 93 “Treaties of Amity and Commerce” with mutual guarantees of “most favored nation” tariff status, non-discriminatory tax and port access for merchant ships, humanitarian aid for shipwrecked sailors, etc. Samples: the United Kingdom (1794, negotiated personally by John Jay, on temporary leave from his job as Chief Justice of the Supreme Court; and nearly wrecked the Federalist Party), the Hanseatic Republic, the Kingdom of Siam
(1833, very much a work of art as a single nine-foot parchment with calligraphy in English, Thai, Chinese, and Portuguese), and the Empire of Brazil (1828, excludes “bucklers, breastplates, helmets, coats of mail” and other evocative military kit).
1934-2024: Concluding that the 1930 Congressional tariff increase had worsened the Depression, and that the overall bill-and-treaty program ignored U.S. exporters, the first New Deal Congress and the Roosevelt administration designed a different approach which remained in use up to 2024. This involved setting tariff rates through international agreements, with Congress writing up policy goals in advance, presidents handling the negotiating, and Congress approving the result or choosing not to. To this end, Congress passed 19 “trade negotiating authority” bills from the first Reciprocal Trade Agreements Act in 1934 through President Kennedy’s “Trade Expansion Act of 1962” to the “Bipartisan Congressional Trade Priorities and Accountability Act” under President Obama in 2015. Presidents used them to conclude 62 trade agreements, starting with tariff-reduction accords with Cuba and Brazil in 1934, and moving on through multilateral “GATT” agreements, FTAs, WTO agreements ranging from information-technology tariffs to Internet issues and trade facilitation during the Obama presidency, to the replacement of the North American Free Trade Agreement with the “U.S.-Mexico-Canada Agreement” in 2020.
In sum: The Supreme Court’s tariff case is indeed important. But it’s important for the integrity of the Constitution, Congress’ authority over “Taxes, Duties, Imposts, and Excises,” and the security of the American public against sudden and arbitrary tax hikes on fuel oil, fertilizer, auto parts, groceries, etc.. It isn’t important for future presidents’ ability to negotiate with other countries over tariff rates, or otherwise influence tariff policy. They’ve been doing that for a long time, without violence to the Constitution, and will be perfectly able to keep doing it regardless of this case’s outcome. The Justices needn’t worry.
PPI’s four principles for response to tariffs and economic isolationism:
Legal update:
The Supreme Court’s Docket 25-250 for V.O.S. Selections and Docket 124-1287 Learning Resources, with filings to date from the plaintiffs and the administration.
Amicus brief from House & Senate Democrats defending Congressional tariff authority.
Economists’ amicus brief explaining that trade balances are not national emergencies.
Court of Appeals opinion upholding C.I.T.’s view, August 29.
Court of International Trade decision striking down “IEEPA” tariffs, May 28. (See V.O.S. Selections v. Trump, #25-66.)
International Emergency Economic Powers Act text.
The official Constitution transcript, from the National Archives; see Article I, Section 8, first clause.
Reagan & Ontario v. Trump:
The Canadian Broadcasting Corporation replays Ontario’s tariff advertisement.
President Reagan’s April 25, 1987, radio address on tariffs and trade.
… and as a follow-up, the September 12, 1988, speech signing the U.S.-Canada Free Trade Agreement.
From February, New Hampshire NPR explains Canada’s role as northern New England’s main source of heating oil.
And last week, KHSB/Kansas City talks to soybean farmers on vanishing export markets and rising input costs.
Long look back:
Dr. Douglas Irwin’s Clashing Over Commerce reviews U.S. trade policy history from the Revolution forward. Hamilton and the Jay Treaty v. Jefferson and reciprocity; the antebellum Whigs-and-protectionism-v.-Democrats-and-revenue debate; high-tariff isolationism under McKinley, Harding, and Hoover; Roosevelt, Cordell Hull, and postwar liberal internationalism; 21st-century globalization arguments, all there.
PPI’s Ed Gresser, speaking at the Cosmos Club two weeks ago, compares the last general tariff increase — the “Smoot-Hawley” Tariff of 1930 — with the Trump administration’s 2025 decrees. Summary: nearly identical rates; different economic and logistics-industry contexts; overlapping ideological goals, but radically different methods of reaching them. Period-piece cameos by a giant airship (the 776-foot Graf Zeppelin), the Senate’s old two-handed telephones, and the D.H. Lawrence novel Lady Chatterley’s Lover.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
