The Executive Branch has expanded its powers beyond the vision of the American founders—far beyond. Its agencies have practically become a fourth branch of government. With powers ceded by Congress, they issue thousands of pages of regulations each year, effectively creating new statutory law. This runs against the spirit of the Constitution. It imposes a good deal of uncertainty and high compliance costs on businesses, depressing economic activity.

　　The president has less de facto control of the executive regulatory agencies than he ought to have as the head of the Executive Branch. But he himself also has too much power. One example now conspicuously in the public eye is the de facto powers the president now enjoys to unilaterally tax imported goods—that is, to levy tariffs.

　　According to the Constitution, the power to levy taxes lies with Congress. Article I, Section 8 reads: “The Congress shall have the Power to lay and collect Taxes, Duties, Imposts, and Excises.” In the beginning, tariff schedules, like all federal tax schedules, were determined by Congress. Tariffs were the main source of federal revenue into the early twentieth century, prior to the establishment of the federal income tax in 1913. The prospect of the president unilaterally determining the particulars of any tax, let alone such an important array of taxes for revenue purposes, would have appeared unjust to many of our founders.

　　The initial delegation of tariff powers arguably took place for a well-intentioned reason. But it has gone too far. Irrespective of one’s position on tariffs, supporters of limited government constrained by a system of checks and balances should be concerned with how much of our trade policy transpires.

　　A Short History of Congressional Delegation

　　Congress began to delegate its tariff powers to the Executive Branch in 1934. At the encouragement of the Secretary of State Cordon Hull, Franklin Roosevelt secured the passage that year of the Reciprocal Trade Agreements Act (RTAA). The RTAA was the Democratic response to the disastrous Tariff Act of 1930, better known as the Smoot-Hawley Tariff Act. The Smoot-Hawley Act was signed into law by the Republican president Herbert Hoover. Hoover had campaigned on a pledge to protect domestic agriculture. After his election, protectionist elements in the Republican party—led by Senator Reed Smoot and Representative Willis Hawley—seized on his proposal to raise agricultural tariffs and added a broader range of industrial protections to an omnibus tariff bill. After Smoot-Hawley, average dutiable tariffs in the US increased to about 59 percent. The Act triggered retaliatory tariffs worldwide and contributed to the severity of the Great Depression in its early years.

　　The RTAA authorized the president to decrease tariff rates by up to 50 percent of the levels set under the Smoot-Hawley Act, conditional on reciprocal or at least comparable reductions by other nations. It appeared to be modestly successful in revitalizing international exchange. According to a Ways and Means Committee report in 1943, American exports to partner nations, before the outbreak of the Second World War, had increased 63 percent between 1934 and 1939. More important than its immediate economic effects, however, was its permanent effect on US and global trade policy. Although it was superseded in 1962 by the Trade Expansion Act, which was later to be superseded by additional trade laws, US trade policy operates within parameters parallel to those of the RTAA to this day. In international context, the RTAA inspired the basic architecture of the General Agreement on Tariffs and Trade (GATT), agreed to by 23 countries and implemented in 1948 to foster “a substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis,” according to its preamble. The GATT, in turn, inspired the structure of the World Trade Organization (WTO), which was established in 1995.

　　The president is still partially beholden to broad interest groups key to his political coalition, and if enough of these clamor for protectionism, he will be inclined in that direction.

　　The RTAA and subsequent derivative trade arrangements require only semi-regular congressional input. The RTAA itself needed to be reauthorized by Congress every three years. Its supporters believed that granting the president the ability to partially bypass Congress—an enduring aspect of trade policy into the present—would help alleviate the problem of parochialism in American trade policy and foster more permanent trade liberalizations.

　　Starting in 1787, omnibus tariff bills featured taxes on a diverse array of imports catering to a diversity of economic interests across the states. Factions from the south and north alike favored protection for their products and free trade for their neighbors: “free trade for thee, not for me.” The first Congress in 1789, for example, enacted a set of high tariff rates on imported wool and manufactured goods against the interest of southern cotton farmers. The same Congress also, however, levied a duty of three cents per pound on foreign raw cotton, to the chagrin of northern textile interests. Alexander Hamilton complained in his Report on Manufactures that the protection on cotton was “undoubtedly a very serious impediment to the progress of northern manufactures.”

　　Parochial trade policy had been anticipated by James Madison, in The Federalist #10: “Shall domestic manufactures be encouraged, and in what degree, by restrictions on manufactures? Are questions which would be differently decided by the landed and the manufacturing classes, and probably by neither with a sole regard to justice and the public good.” Proponents of the RTAA believed that proper institutional reform could solve the dilemma. By shifting the balance of power towards the executive, but still subjecting executive action to periodic review, many believed that superior policy would result. An enlightened president, aware of the public benefits of free international trade, could resist the pressures of domestic factions and affect policy changes for the good of the American people. In 1945, in an address to request another extension of the RTAA, Roosevelt argued that trade policy should no longer be a subject of partisan disagreement. Trade, he said,

　　is no longer a question on which Republicans and Democrats should divide. The logic of events and our clear and pressing national interest must override our old party controversies. They must also override our sectional and special interests. We must all come to see that what is good for the United States is good for each of us, in economic affairs just as much as in any others.

　　Supporters of the institutional innovations of the RTAA and subsequent trade deals appeared for decades to have been vindicated. Parochial trade policy seemed to retreat behind an ascendant free trade regime supported by Democratic and Republican presidents alike.

　　That has not been the case since 2016.

　　The Problems with Executive Delegation

　　The concentration of trade power in the executive branch, which began in 1934, is not an end-all solution to the problem of parochialism. Beliefs, preferences, and economic interpretations of the president and his cabinet will not be consistent, much less consistently enlightened. In The Federalist #10, Madison implicitly admitted that an enlightened statesman could, in theory, balance the competing interests of domestic economic factions. But, he warned, “enlightened statesmen will not always be at the helm.” If a president believes that taxes on imported goods are “beautiful” per se, he will be less inclined to use his executive negotiating authority to liberalize commerce.

　　It is true that the president is not subject to the same kind of special interest pressures as senators and congressional representatives. In that respect it is reasonable to expect less parochialism from executive-led trade policy on average. But the president is still partially beholden to broad interest groups key to his political coalition, and if enough of these clamor for protectionism, he will be inclined in that direction. This partially explains why Trump began to pivot toward protectionism in his first term and why Biden, despite his rhetoric, left many of the Trump tariffs in place. The so-called “China Shock” of the early twenty-first century led to real displacements and fostered a demand among segments of the electorate for redress, which produced a supply of protectionist policy driven by the executive branch.

　　Such general problems that come with a concentration of executive trade power are compounded by additional authorities granted to the executive starting in 1962 under the Trade Expansion Act. That act granted the president broader authorities over trade policy than those conferred by the RTAA. He was permitted, for a five-year period, to unilaterally reduce tariffs by 50 percent, to eliminate tariffs on goods traded mostly between the US and the European Economic Community, and to cut tariffs on specified agricultural products. The goal of the Trade Expansion Act, like the RTAA, was to promote liberalizations. The United States, JFK commented, must “trade or fade.”

　　The American people are increasingly beholden to our presidents’ whims about tariffs, which we should not forget, are taxes, the burden of which falls largely on the American people.

　　The Trade Expansion Act included, however, a crucial provision, Section 232, allowing the president to increase trade barriers in response to national security threats. It was under Section 232 authority that Trump levied aluminum and steel tariffs during his first term. National security powers increased further under the International Emergency Economic Powers Act (IEEPA) of 1977, in which Congress granted the president power to tax foreign goods in cases of “unusual and extraordinary” threats. It was under the auspices of IEEPA that Trump threatened tariffs on Mexico in 2019; it is under IEEP authority that he has recently levied tariffs on our North American allies.

　　Beyond national security issues, Congress delegated yet further authority to the executive in the Trade Act of 1974. The Trade Act granted the executive authority to redress domestic injuries from international trade and, importantly, established the office of the US Trade Representative, charged with “developing and promoting United States foreign trade policies.” The Trade Act granted wide powers to the president, via delegated authority to the Trade Representative, to take protective action in cases of “unfair trade practice,” defined as anything that

　　is considered to be inconsistent with the provisions of any trade agreement and has a significant adverse impact on United States commerce, or

　　has a significant adverse impact on domestic firms or industries that are either too small or financially weak to initiate proceedings under the trade laws. The effectively unilateral trade powers granted to the executive under the pretense of national security and fairness concerns, combined with the power to negotiate reciprocal trade deals, are simply too broad. The reforms to trade policy brought forward by the RTAA clearly have benefits. Although they cannot guarantee a desirable trade regime, they at least mitigate the protectionist logrolling that defined omnibus tariff bills of early American history.

　　On the other hand, the powers granted by the Trade Expansion Act, IEEPA, and the Trade Act of 1974, are a different matter. At the very least, they need far more congressional oversight. The protective measures recently advanced out of apparent concern for national security have, at best, tenuous connections to security issues. National security appears more often to be an ex-post justification for trade barriers deemed already desirable by the president. The US military, for example, uses only a very small portion of domestic steel and aluminum—less than 5 percent—for its production. The first Trump administration still deemed global steel competition to be a sufficient national security threat to justify tariffs. There is no established litmus test for “unfair” trade practices, opening the door to arbitrary protectionism, as we’ve seen in cases in the past nine years of the protection production of a wide range of things from washing machines to solar panels.

　　Rand Paul has recently proposed a measure along these lines with his No Taxation Without Representation Act. The key provisions of the act: “The President can only add new taxes on imports if: the President explains why the tax is necessary and sends a proposal to Congress” and “Congress passes the new tax into law.” Another proposal is the Global Trade Accountability Act, which has been repeatedly proposed by Senator Mike Lee and Representative Warren Davidson. That act would require explicit congressional approval of most trade restrictions passed by the executive for national security reasons or for claims of unfair trade practices.

　　Such acts are unlikely to advance in the current Congress. But reform along these lines is needed. The American people are increasingly beholden to our presidents’ whims about tariffs, which we should not forget, are taxes, the burden of which falls largely on the American people. And arbitrary taxation is anathema to the American tradition.