Tariffs have been a key aspect of international trade for many countries, including the United States. Historically, tariffs were a major source of revenue for governments, but today they are used more selectively to protect domestic industries, advance foreign policy goals, and as negotiating leverage in trade agreements.
The U.S. Constitution grants Congress the power to set import tariffs, which it has partially delegated to the President. As a member of the World Trade Organization (WTO) and a party to various trade agreements, the United States operates within a rules-based global trading system that aims to reduce trade barriers and prevent trade wars. Key principles of this system include nondiscrimination, binding commitments, transparency, and safety valves to address unfair trade practices.
Since the establishment of the WTO in 1995, global tariff rates have declined, leading to increased trade and market openings for U.S. exports. U.S. tariff policy is a collaborative effort between Congress and the President, with Congress authorizing the President to negotiate trade agreements and adjust tariffs in certain circumstances.
Presidential Trade Promotion Authority (TPA) allows the President to negotiate trade agreements and adjust tariffs within set boundaries without further congressional action. Various statutes empower the President to adjust tariffs in response to trade-related concerns, national security interests, and surges in imports that harm U.S. industries.
The Secretary of the Treasury establishes regulations for tariff collection, which is administered by U.S. Customs and Border Protection (CBP) at ports of entry. Merchandise is classified and tariffs are assessed using the Harmonized Tariff Schedule of the United States (HTSUS), with importers declaring the value or quantity of their goods for review by CBP.
Over the past 70 years, tariffs have accounted for a small percentage of total federal revenue in the United States, with the country using tariffs to promote global trade liberalization and pursue foreign policy goals. The U.S. has reduced or eliminated many tariffs through bilateral and multilateral trade agreements, supporting the principles of the WTO and aiming for lower global tariff rates.
Congress has delegated extensive tariff-setting authority to the President, leading to a decline in global tariff rates over the years. The Trump Administration increased tariffs on certain goods, doubling duties paid on U.S. imports, a policy that the Biden Administration continued. Some Members of Congress support increased tariffs, while others express concerns about the economic impact and the President raising tariffs without congressional approval.
In conclusion, tariffs play a significant role in international trade, and the United States navigates its tariff policy within a rules-based global trading system to promote trade, protect domestic industries, and advance foreign policy goals.
