Fixing Section 232
After what had become a monthly ritual of delaying the Section 232 steel/aluminum “national security” tariffs for some countries, the Trump administration went ahead and imposed them on Canada, Mexico and the EU as of today. (Retaliation by these countries will follow soon.) There is also now an investigation into whether tariffs should be applied to automobile imports on the same basis. You may wonder, how can the term “national security” be stretched so far beyond issues related to actual national security? Commerce Secretary Wilbur Ross explains why:
Ross … cited an “elaborate definition” laid out in the Section 232 statute and said the tool “isn’t by any means confined strictly to military applications.”
“So, while the label is national security you need to look at the legislation itself, and the question isn’t ‘Is this mainly a military thing?’ It’s obviously mainly not a direct military thing but infrastructure and the economy are what gives you military security,” Ross said, reiterating prior comments.
“So, I know people like to wave the flag: ‘Oh, well you shouldn’t use that definition.’ That definition is what Congress enacted long before Donald Trump became president. And so, the fact that we are utilizing legislation that was passed quite a few years ago shouldn’t surprise anyone,” he said.
He’s right about the broad language of the statute. Take a look at a key provision, in particular the second sentence:
(d) Domestic production for national defense; impact of foreign competition on economic welfare of domestic industries
For the purposes of this section, the Secretary and the President shall, in the light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. In the administration of this section, the Secretary and the President shall further recognize the close relation of the economic welfare of the Nation to our national security, and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.
Thus, under the statute, broad concepts of “economic welfare” get mixed together loosely with national security. Read as a whole, national security should still be the focus of the investigation, but the references to the economy could be abused by an administration looking for excuses to impose tariffs. (And that’s not just hypothetical anymore.)
Of course, the President and the Commerce Department are not required to apply this statutory language so broadly. But they do have the discretion to do so. This makes the fix here pretty obvious: Congress should revise the language in a way that takes away some of that discretion. There are two ways it could do this.
First, delete some of the language that refers to factors not closely related to national security. For example, the whole second sentence quoted above could come out. Such issues are already dealt with through “safeguards” laws (in the U.S., Section 201). There is no need to duplicate this in Section 232.
And second, the statute should make clear that imports from countries with whom the United States has a defense treaty/security alliance do not threaten national security. These countries are our allies, and trading with them does not impair our security.
Now, it may be that, if Section 232 is amended, the Trump administration would simply move on to other avenues for protectionist abuse. Nevertheless, Section 232 is clearly a problem right now, and it’s worth taking the time to fix it.
