Under the Trump administration, our nation is experiencing a controversially populist policy approach towards foreign relations, inciting fear and aggression en masse with regards to the manufacturing sector abroad and international trade writ large. We have most recently seen the administration implement these outdated public policy ideologies via the, arguably illegal, imposition of tariffs on all goods imported from China under Section 301 of the Trade Act of 1974.
Recently, approximately 3,500 American companies filed lawsuits against the US Government in relation to these tariffs. First, with regard to domestic law, the Executive branch has discretion, as authorized by Congress, “to modify tariffs under certain circumstances.” The companies filed in the U.S. Court of International Trade, specifically claiming “the unlawful escalation of the US trade war with China through the imposition of a third and fourth round of tariffs,” that have drastically increased costs of goods imported from China into the US by American firms. The legal arguments encompassed the failure to “comply with administrative procedures,” specifically “timeliness of action”, as well as the broadening of the tariffs “for reasons untethered to” the intellectual property conflict with China.
Second, with regard to international trade law, the World Trade Organization (WTO) ruled the imposition of these tariffs violated their “most-favored nation principle.” The tariffs, which ultimately measured upwards of “$350 billion worth of Chinese goods,” were not uniformly applied to all members as per the WTO principle. Although the ruling may carry less weight than the WTO originally intended, due to China’s counter-tariffs and the various subsequent negotiations, the US administration is using this question of international law as support for its ill-advised attempt to revive exceptionalism.
The administration’s public policy arguments advocating for the tariffs center around protectionism, trade agreement renegotiation and national security concerns, most notably the risks surrounding China’s theft of American intellectual property. These motivations may seem illustrative, on their face, of forward-thinking policy and decision-making on the part of the Government. But their consequences on the American public are more reminiscent of an outdated political ideology and a superficial understanding of domestic and international relations, most notably international trade law.
The Brookings Institution elaborates on the various downfalls of each policy rationale. Most notably, the Institution addresses the concept of protectionism and the suggested beneficial economic impact. And for the purposes of this piece, it is also crucial to point to the further relationship between big business and both domestic and international law following the imposition of these tariffs. American firms importing Chinese goods realistically bear the brunt of the cost, which is in turn transferred to American households. Moreover, the promise of protecting and creating jobs within the manufacturing sector has only increased to a certain extent, given the negative impact of more expensive goods used as inputs in production lines. One could even argue that should the tariffs create more jobs than they destroy, this would likely remain a short-term alteration as the nature of America’s economy favors outsourcing of the production sector and internal investment in the services sector.
So, where does this leave us?
Most significantly, it leaves us with several questions surrounding the precedents related to a multitude of lawsuits brought by the private sector against the US Government. Specifically, how does the private sector pushback against the illegality of an international trade policy imposed by the US impact our global soft diplomacy positioning? Or the authority and credibility of the WTO and international trade law more broadly? Or the tendency of firms to flood the courts when financial and economic policies are imposed abroad that impact prices at home? Arguably, the escalation of the US trade war with China was an exponential and unnecessary “show of force” with a costly economic outcome for American businesses, and a contentious domestic and international legal discussion with outlying questions and answers. This brings us to experts who have thought-provokingly questioned the administration’s true motivations for imposing tariffs, namely, to encourage withdrawal from the WTO, and expressed concern for the national economic impact of that action. Ultimately, it seems likely the WTO’s ruling, and perhaps the American firms’ lawsuits, will negatively impact US diplomacy abroad as well as trust in international trade law and institutions by other countries.