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Understanding the Trump Administration’s “National Security” Rationale (Part II)

Posted June 14, 2018

Having departed from precedent by using the most expansive possible interpretation of U.S. “national security” for purposes of Section 232 of the Trade Expansion Act of 1962 and widening the scope to include “a very big variety of things” on the grounds that “without a strong economy, you can’t have a strong national security,” the administration appears to be deliberately attempting to avoid any congressional checks as it moves unilaterally to act on President Trump’s protectionist “America First” trade agenda.
Trump & Steelworkers

Abuse of Authority

Calling it a “blatant abuse” of the Section 232 authority delegated to the president, Republican Senator Bob Corker has been a harshly outspoken critic of the administration in this regard. “Making claims regarding national security to justify what is inherently an economic question not only harms the very people we all want to help and impairs relations with our allies but also could invite our competitors to retaliate,” he argued.

Fellow Republican Senator Pat Toomey warned that imposing the tariffs – which he felt obligated to remind his colleagues were “taxes on American consumers” – under the “false pretense of ‘national security’ weakens our economy, our credibility with other nations, and invites retaliation.”

Earlier this month, Corker introduced bipartisan legislation seeking to rein in the executive by requiring congressional approval of tariffs levied in connection with Section 232. Under his proposed bill, a mandatory review and sign-off by lawmakers would apply not only to future such actions taken in the name of national security, but also to those taken during the past two years; effectively making it a direct attempt to thwart Trump’s contentious metals tariffs.

Despite saying they “intellectually” supported the general idea behind Corker’s legislation, other Republican senators opposed it nonetheless; mainly out of fear of being seen as undercutting the president on trade ahead of the crucial midterm elections. After the bill was blocked this week from coming to a vote, Corker angrily slammed his GOP colleagues, ridiculing them for being afraid to “poke the bear” and decrying their feckless abdication of the oversight responsibilities they are constitutionally empowered with.

Bad Arguments

For reasons explained previously, the suggestion that Canada poses a threat to U.S. national security is patently absurd – but then, so too are other assertions being made as a justification for the tariffs, such as the claim that foreign steel and aluminum imports are somehow “threatening to impair” the ability of domestic producers to meet America’s military requirements.

In a memo to Commerce prior to the Section 232 reports being delivered to President Trump, U.S. Defense Secretary James Mattis stated: “The U.S. military requirements for steel and aluminum each represent only about 3% of U.S. production. Therefore, DoD does not believe that the findings in the reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements.”

While that should really have been the end of the story, the argument has also been made by the administration and supporters of its protective metals tariffs that in order to maintain Pentagon’s avowedly small share of U.S. steel and aluminum output there must still be a “viable industrial base.” In this regard, backers of the Section 232 trade action claim that maintaining “ongoing viability” requires U.S. mills to be operating at 80% capacity or risk going out of business.

However, as we discussed here last month, the administration’s objective of raising the industry’s average capacity utilization rate from the present figure of roughly 72% has recently been called into question by an independent economic consulting firm. After crunching the numbers, researchers found there was no correlation between steel imports and steel capacity utilization, meaning that slapping punitive tariffs or restrictive quotas on imports would not necessarily lead to the hoped-for increase in the operating rate to 80% or more.

A Slippery Slope?

One of the many concerns about the administration drawing such an unusually broad linkage between economic and national security is that it paves the way for Trump to potentially use this same specious justification to impose additional protectionist “remedies” on a wide range of goods having no direct connection whatsoever to national defense; all without any congressional approval or review by the independent International Trade Commission, as would normally be the case.

According to the Commerce Department’s Section 232 reports, “national security” as defined by the present administration, “also encompasses U.S. critical infrastructure sectors including transportation systems, the electric power grid, water systems, and energy generation systems.” Even more generally, Defense Secretary Mattis suggested the interpretation could even be viewed at the most basic level as simply “keeping its economic house in order,” which could mean just about anything.

Although that kind of overreach may be far-fetched, the administration is already using its expansive new rationale to investigate whether imported automobiles pose a national security threat, even though the move has been almost universally panned by industry stakeholders as being “a really stupid idea” that would be calamitous to the auto industry, global economy and U.S. relations with key trading partners and allies.

At best, some have suggested that the true objective of the administration’s latest 232 investigation is to leverage this tariff threat in trade negotiations with Mexico, Canada, Japan, the European Union, and South Korea. If true, which seems entirely plausible, it once again shows that the “national security” rationale is both a sham and an abuse of the process.

Bad Faith

As he sometimes does when airing his grievances on Twitter, President Trump seems to have accidentally admitted a truth about his steel and aluminum tariffs while in the process of furiously attacking Prime Minister Trudeau for remarks made following the recent G7 summit in Quebec.

Among the barrage of tweets sent while heading to Singapore about the U.S. being unfairly taken advantage of in various ways by every other country in the world, Trump stated that “Our Tariffs are in response to his of 270% on dairy!”

While obviously not the only reason for the Section 232 tariffs on steel and aluminum products, weaponizing them as leverage to promote the interests of Wisconsin dairy farmers clearly doesn’t comport with the administration’s months-long effort to paint them as a matter of “national security,” even by the strained logic of Wilbur Ross and other economic populists in the White House.