A MARTÍNEZ, HOST:
Let's bring in Alan Wolff. He's a trade policy specialist who was part of the government team that drafted Section 301 of the Trade Act of 1974, which President Trump's latest tariffs fall under. He is now a senior fellow at the Peterson Institute for International Economics. Alan, you worked on trade policy under former presidents Ford and Carter. First off, just what is Section 301 as simply as possible?
ALAN WOLFF: Section 301 is the president's retaliatory authority and his trade agreement enforcement authority. Here we're not talking about enforcing trade agreements. We're talking about a finding that certain foreign practices are unreasonable and burden U.S. commerce. And the president can put on a tariff, not just a 10% or 10.5% or 12%, but it's unlimited. However, he's chosen to put all countries into two baskets, some at 10% - mainly they have agreements with the United States - and the rest at 12.5%, which layer on top of, as you said earlier in this program, other tariffs on national security basis like steel and aluminum or other findings, like, against Brazil and Canada, that this will be a layer on top of that. But basically, it's all U.S. imports.
MARTÍNEZ: OK. So the claim is that they've already determined unreasonable practices. What about the unjustifiable or discriminatory? Have they done that yet?
WOLFF: They don't have to because unreasonable is plenty, and it's enough to justify. If it were one country, let's say Bangladesh were - was - Bangladesh was importing a lot of Chinese cotton from Xinjiang Province and ending up shipping it to the United States or competing with U.S. goods, this would be an attack, a secondary sanction against Bangladesh, not for having unfair practices with respect to forced labor, but for using Chinese goods that are already using forced labor.
MARTÍNEZ: OK. Now, if these tariffs go up in court - get challenged in court, how likely would it be that the Supreme Court would overturn them?
WOLFF: Well, this is going to be a difficult question for them because it is a statute that does call for tariffs, which the emergency finding of the first Trump tariffs, which the Supreme Court struck down, they said, well, that doesn't include tariffs. The second time they used balance of payments - the president used balance of payments authority, but that was good only for 150 days, and it expired midnight last night.
So what will the court look at now? It'll say, well, you did it again - you used authority that belongs to Congress by applying a tariff to all countries - 60 countries, 60 economies - covering all of U.S. trade. You don't get to do that. Yes, you could've retaliated against individual countries that you found to be burdening U.S. commerce, but this goes too far.
MARTÍNEZ: Now, we mentioned earlier that tariffs of 10% went away. The new tariffs are 10- to 12.5%. Will consumers feel these tariffs?
WOLFF: Yes. There's no way of avoiding that. You know, foreigners who ship here might give some discounts. But generally, most of the tariff gets passed on one way or another to the importer. The importer has to then decide whether he's going to pass on that tariff to his customers, and let's say, retailers. And the retailers decide how much they can pass on to the consumer. Someone has to pay, and it's always going to be an American who pays most of the bill.
MARTÍNEZ: Yeah. Alan, you've worked on trade for most of your career. With about 30 seconds left, if you can, what's the strongest argument backed up by data for using tariffs?
WOLFF: The tariffs can be used to get other countries to change the way they deal with the United States. Tariffs can be used to protect industries that are in trouble under different statutes. Tariffs can be used to carry out and enforce a trade agreement. But this blanket tariff, that goes beyond anything that was ever contemplated by the Congress. And it has the commerce power, the Commerce Clause, for the tariff authority under our Constitution.
MARTÍNEZ: Alan Wolff at the Peterson Institute for International Economics. Alan, thank you.
WOLFF: Thank you very much. Take care. Transcript provided by NPR, Copyright NPR.
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