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Trump vs Frederic Bastiat: Who Is Right About Tariffs?
• https://mishtalk.com, By MishThe Council on Foreign Relations Discusses Tariffs
What Is a Tariff?
A tariff is a tax imposed on foreign-made goods, paid by the importing business to its home country's government.
U.S. President Trump wielded tariffs more than any recent American president, particularly against China. President Biden has largely left these levies in place while imposing his own.
Who authorizes tariffs in the United States?
The Constitution grants Congress the power "to regulate commerce with foreign nations, and among the several states," which it used for more than a century to impose tariffs. Perhaps most infamously, Congress raised close to nine hundred separate tariffs with the 1930 Smoot-Hawley Tariff Act, which many economists say worsened the Great Depression. But over the past ninety years, Congress has delegated more and more trade authority to the executive branch, in part a response to Smoot-Hawley.
These laws give the president the power to raise tariffs if foreign countries are found to be engaged in unfair trading practices, or if imported goods are deemed to be threatening critical domestic industries and thus harming national security. They also allow the president to impose tariffs if domestic industries are "seriously injured" by import competition, even if there is no alleged foul play.
Many presidents have exercised these powers, though Trump did so to a far greater extent than most of his predecessors, imposing tariffs affecting hundreds of billions of dollars worth of goods from China and some U.S. allies, including members of the European Union (EU). Biden has maintained most of Trump's tariffs on China and introduced several of his own. However, he has reined in tariffs on EU member countries.