Closing Pandora’s Box: The Growing Abuse of the National Security Rationale for Restricting Trade

Summary of Study

Bottom Line: The Trump Administration’s use of national security-reasoned tariffs threatens to upset the balance of international trade. Remedying this will require rebalancing international trade agreements and restricting future use of tariffs enacted under national security priorities.

Every country reserves the right to restrict trade to serve its national security.

The General Agreement on Tariffs and Trade states that no international trade agreement can prevent countries from restricting trade for matters of national security.

Domestically, this is bolstered by the Trade Expansion Act of 1962.

Section 232 of this agreement allows the president to “restrict imports on national security grounds.” Doing so requires an investigation by the Department of Commerce. When President Trump took office, there hadn’t been an investigation since 2001. There have been 5 since.

These tariffs have provoked strong foreign and domestic backlash.

At home and abroad, many people doubt the presence of real “national security” rationale behind the current administration’s tariffs.

Many call on the administration to roll them back, with some countries going so far as to respond in kind with retaliatory tariffs, which could exact a true threat to the United State’s national security. On a long term scale, continuing to provoke such international trade disputes ultimately risks undermining the World Trade Organization’s dispute resolution mechanism for the future.

“A Rebalancing Proposal for National Security”

Only by rebalancing existing trade agreements will the administration be able to re-establish a solid ground for true national security tariffs, thereby putting an end to retaliatory tariffs in the near term and safeguarding the future authority of the WTO in the long run. Said rebalance can be done either by lifting the tariffs imposed thus far, or lifting other tariffs in an effort to offset the sanctions imposed by the former.

Doing so would be a start towards paving the way forward to a more dynamic, transparent future.

Read the full article here. Read the full Cato Institute Policy Analysis here.