This weekend, the White House announced an arrangement with the European Union (EU) to suspend longstanding tensions over U.S. “national security” tariffs on steel and aluminum imports implemented in 2018. Many news outlets have described the agreement as a significant change in course for U.S. trade policy – a “roll back” of President Trump’s tariffs and shift away from a policy of bellicose bilateralism towards one more supportive of trade and U.S. allies. Look a little more closely, however, and we see that the deal merely replaces the tariffs with a different, more opaque and distortionary system of restrictions. Even worse, it signals a full Biden administration embrace of Trump-era managed trade and, more troublingly, the continuation of the former president’s radical shift to a power-based trading system that imperils both global trade and the multilateral system under which it has flourished since the 1940s.

As you’ll recall, President Trump in March 2018 used Section 232 of the Trade Expansion Act of 1962 to impose tariffs of 25 percent on steel and 10 percent on aluminum from almost every country in the world because these goods supposedly imperiled U.S. “national security.” Even though the vast majority of these metals came from close U.S. allies (not potential adversaries like Russia or China), Section 232’s ambiguous “national security” standard allowed almost anything from anywhere to be considered a threat. Over the last few years, the Trump administration eliminated tariffs on imports from Australia, Canada and Mexico, while Argentina, Brazil and South Korea agreed to strict quotas.

The tariffs on European metals, however, remained in force, thus pushing the EU to impose retaliatory tariffs against U.S. imports and to announce a doubling of those tariffs as of December 1, 2021. To avoid further pain, the Biden administration entered into negotiations with the EU to resolve the dispute – even though President Biden could have simply eliminated the U.S. tariffs and the entire bilateral dispute with the stroke of pen. (Section 232 provides the president with essentially unfettered discretion to terminate actions taken against imports alleged to imperil national security.)

In so doing, however, Biden would have run afoul of politically important U.S. steelmakers and unions (and their congressional backers). So his team instead secured the agreement announced this weekend, which – per the framework announced by the Department of Commerce – consists of the following elements:

• The United States will impose a tariff-rate quota (TRQ), effective January 1, 2022, allowing for a fixed volume of EU imports to enter the United States duty-free, with any additional quantities facing tariffs at the Trump-negotiated levels.
• There will be separate quotas for 54 different steel product categories, 16 different aluminum product categories, on each of the 27 EU member states, based on its historical exports of those goods to the United States. The exact quantities have not yet been released, but they appear to be quite low: for example, the framework sets the total steel quota at 3.3 million tonnes – about two-thirds of the volume that the United States imported in 2018 (4.8 million tonnes, according to The New York Times). Thus, “[m]etal unions in the United States praised the deal, which they said would limit European exports to historically low levels.”
• The deal will also maintain the current “exclusion process,” under which U.S. metals consumers can petition for tariff relief. According to the Wall Street Journal, the deal will keep current exclusions for two more years – thus expanding the total tariff-free volumes entering the U.S. by another million tonnes or so. As we’ve detailed, however, this process has been arbitrary, erratic, and opaque – a view confirmed by the U.S. Department of Commerce’s Office of the Inspector General, which reported in October 2019 that “the Section 232 exclusion request review process is neither transparent nor objective” and cited concerns of “the appearance of improper influence in decision‐​making for tariff exclusion requests.” So U.S. importers benefiting from exclusions can breathe an immediate sigh of relief, but they remain stuck in this uncertain, Kafka-esque process over the longer term.
• Quotas will be administered quarterly, with volumes filled on a first-come-first-served basis and up to 4 percent of unused volumes during any one quarter carried over into the next quarter. TRQs administered in this fashion are sure to introduce distortions, for example, large U.S. importers stockpiling early in a quarter and paying higher prices to do so. (See, e.g., this USDA paper on the issue.)
• The TRQ will be adjusted each year, but every 6 percent change in U.S. steel demand will only be met by a 3 percent change in the TRQ. Thus, if U.S. steel demand increases next year – as is expected with various stimulus measures on tap – quota levels will not increase to meet it. (For example, if demand for steel increased by 18 percent in 2022, the total quota would only increase by 9 percent.)
• To be eligible for the TRQ, steel imports must be “melted and poured” in the EU – an onerous new “rule of origin” standard and major departure from the current one, under which goods are “originating” from European and other countries where they have been “substantially transformed” there. Not only will this standard further limit metals’ eligibility (for example, stainless steel made from semi-finished slabs imported into the EU won’t qualify) for duty-free treatment, but will also impose new reporting and compliance burdens on U.S. importers who will have to provide “relevant documentation substantiating compliance” or else face “remedies and/​or penalties as provided for under U.S. law.”

Given the new system’s costs and complexities, there’s little support for the Biden administration claims that the deal will surely “lower prices for American consumers and families by providing relief for American manufacturers who rely on readily accessible, affordable steel and aluminum to make their products.” (Recent research shows, for example, that the TRQ on residential washing machines enacted in 2018 significantly increased consumer prices.) Instead, the only clear beneficiaries will be the European exporters lucky enough to win duty-free quota allocations (“rents”) and the lawyers hired to navigate this new managed trade quagmire. Indeed, smaller U.S. importers might face additional burdens when forced to compete with large American companies than can afford said lawyers and win cheaper metals. No wonder, then, that American steel users have called the deal “disappointing” and warned of “market manipulations and… gaming of the system that could put this country’s smallest manufacturers at an even further disadvantage.”

Only the complete removal of the tariffs would ensure broad benefits for U.S. consumers and the economy.

Beyond the economic concern, the EU deal is also a troubling development for efforts to reform Section 232. The title of the White House release speaks volumes, announcing “The United States and European Union To Negotiate World’s First Carbon-Based Sectoral Arrangement on Steel and Aluminum Trade.” Nowhere in the release are the words “national security” mentioned—even though that was the alleged basis for the tariffs in the first place. While addressing the carbon footprint of the steel and aluminum industries may be a legitimate federal government objective, it has nothingto do with the rationale laid out for the imposition of these tariffs. Thus, if the Biden administration wishes to engage in negotiations on this issue, it should have been separate from discussions on existing 232 tariffs, which Commerce Secretary Gina Raimondo herself admitted when asked about the steel tariffs, “Europe of course is not a threat to American national security.” These tariffs should not be used as leverage to compel our allies to agree to unrelated U.S. interests, and trying to shift the Section 232 tariffs’ focus from a dubious national security threat to climate change is wholly inconsistent with the statute.

The Biden administration is also flouting international law. For starters, it is embracing an interpretation of GATT Article XXI “Security Exceptions” described by law professor Mona Paulsen as “a path whereby any Member may unilaterally act without having to provide any evidence for determining when (and how) an emergency stops” allowing World Trade Organization (WTO) members to “persistently [redraw] their trade relations on the basis of security interests.” The agreement is also likely inconsistent with WTO rules (GATT Article XIII and the Safeguards Agreement) requiring the application of the “most-favored nation” principle to quotas—essentially, countries cannot discriminate between their trading partners. The deal might also violate WTO prohibitions on voluntary export restraints, which the EU here appears to be implementing. Though a future WTO dispute on these issues may be unlikely, the larger concern here is that an agreement between two of the largest WTO Members to ignore multiple rules would set a worrisome precedent for other countries to follow. One would expect such disregard for the United States’ multilateral obligations from President Trump, but now it’s coming from Biden and the EU too.

The rules-based multilateral trading system has succeeded for so long because even the most powerful states agreed to be bound by the rules and voluntarily complied with them in most cases. Today, however, the United States continues to pursue a trade policy that is at odds with the values that undergird that system. When the WTO was established in 1994, those involved in the negotiation issued a declaration affirming that the WTO would launch “a new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples.” While the steel industry may cheer, it is hard to see how a backroom deal between two of the world’s largest economies to continue to restrict trade in metals on bogus “national security” grounds does anything for the benefit and welfare of their people more broadly, let alone those in the wider world.

It’s all positively Trumpian.

Pointing to empty store shelves and rising prices brought about by the current “supply chain crisis,” Sen. Josh Hawley (R‑MO) has introduced legislation that would mandate at least half of the value of goods “critical” to national security be produced in the United States. However, one of the most visible examples of the current “supply chain problem” – empty grocery store shelves and rising food prices – shows why simplistic government localization mandates are no panacea and could, in fact, make things worse.

In particular, the vast majority of the food that Americans consume already is produced in the United States. According to the U.S. Department of Agriculture, for example, more than 80% of Americans’ total food and beverage consumption in 2016 was produced domestically:

More recent data from the USDA show that almost all of our grains, eggs, dairy, and meat are produced here (see Figure 2), yet many of these same products have experienced the highest price increases in recent months.

That a mostly-domestic U.S. food supply chain hasn’t protected American consumers from recent shortages and price increases is unsurprising. For starters, many of the same things that stress global supply chains – COVID-19 outbreaks; supply-demand imbalances; labor shortages in the trucking and warehousing industries; misguided trade, transportation, and immigration policies; etc. – stress domestic ones too. Indeed, one such policy, – the Jones Act, which mandates all shipments between U.S. ports be made on American made, ‑owned, ‑crewed and flagged vessels – might actually burden U.S. supply chains more than their international counterparts, because the law makes coastwise shipping cost-prohibitive and increases pressures on (and prices of) alternative inland transportation. (Ironically, the Jones Act is just the type of local content restriction that Senator Hawley wants to implement for all “critical” goods.)

As we’ve discussed here repeatedly, moreover, supply chain repatriation might insulate the United States from foreign supply or demand shocks but would make us more vulnerable to domestic shocks in the process – a conclusion supported by both academic research and recent pandemic experience in various U.S. manufacturing industries. (See also this U.K. history lesson from Cato’s Ryan Bourne.) Indeed, our mostly-domestic food supply has proven especially vulnerable to local shocks, such as natural disasters. In August 2021, for example, Hurricane Ida forced the temporary closure of major fertilizer chemical plants in southern Louisiana, causing a widespread shortage of fertilizer, spiking prices, and wreaking havoc on farmers in states such as Kansas and Kentucky. One chemical plant remained closed for five weeks. Ida also caused major inland shipping issues, flooding Mississippi River waterways and thus delaying domestic shipments of major crops such as corn and soybeans. Last year, pandemic-related closures of domestic meatpacking plants temporarily reduced U.S. meat production, thus causing the very logistical pressures, supply shortages, and price increases that Senator Hawley’s proposed local content mandate seeks to prevent. And just this week, we’ve learned that dairy prices are facing new pressures because rising labor costs are threatening U.S. dairy production – production, by the way, that has long been subsidized and insulated from foreign competition and just won new protection under President Trump’s NAFTA replacement, the USMCA.

A global pandemic essentially guarantees that supply chains, both global and domestic, will face challenges. But simplistic localization mandates won’t solve these problems and would likely exacerbate them – harming American consumers, manufacturers, and national security in the process.

Although most of the discussion surrounding current U.S. port and supply chain bottlenecks has focused on the economy and Americans’ holiday shopping plans, some are using the situation to sell the $1 trillion bipartisan infrastructure package now before Congress. That bill directs nearly $12 billion in taxpayer funding to U.S. seaport infrastructure and billions more in general infrastructure grants for which ports are eligible.* Given that American ports lag their global peers in terms of both efficiency and size, such advocacy makes some superficial sense. Dig a little deeper, however, and you see that, while U.S. port automation and expansion would surely be worthwhile, the infrastructure bill is not the way to do it – and might actually make things worse.

First, there is little to indicate that the ports need federal (U.S. taxpayer) money. American seaports are not operated by the federal government but are instead owned and managed by state or local boards and authorities. These authorities levy user fees on ships, in addition to receiving state funding, to help support their activities, which often include maintenance and infrastructure projects. As our colleague Chris Edwards has noted, state and local governments have been swimming (pun intended!) in tax revenues in 2021 and have already received tens of billions of dollars in federal pandemic-related funds that they didn’t need. State governments and port authorities are thus already more than capable of funding new port infrastructure, and many port authorities are, in fact, doing just this: railroad expansion at the Port of Charleston, for example, has already received over $200 million in funding from the State of South Carolina.

Furthermore, federal support for port infrastructure, usually undertaken by the Army Corps of Engineers, is already funded through Harbor Maintenance Fees (HMFs) on incoming ships. The fees finance dredging and certain maintenance projects on the waterside of the port, with states also contributing a certain percentage of the funds. While the bulk of the infrastructure bill’s proposed port subsidies are allocated to the Army Corps of Engineers, including $4 billion for dredging projects, a September 2020 report from the Congressional Research Service noted that the HMF Trust Fund already has a surplus of over $9 billion. Moreover, recent legislative changes in both the CARES Act and Water Resources Development Act of 2020 have made it easier to disburse funding from the Trust Fund, and altered the distribution formula to distribute more funds to projects at the largest and busiest ports, such as those in backlogged Los Angeles and New York. Even more federal funding for the Army Corps of Engineers is therefore unnecessary (at best), and – even if it were necessary – could be achieved by simply increasing HMFs.

Second, the proposed federal infrastructure spending comes with conditions that have been repeatedly shown to raise costs, lower the quality of work, and delay projects for months or even years. For example—

• The infrastructure bill’s “Buy America” provisions require that most materials used in U.S. transportation projects be produced in the United States. As scholars at Cato have consistently shown, these protectionist restrictions can increase the costs and timing of U.S. infrastructure projects (if not canceling them outright), reduce the quality of inputs or finished projects, and decrease innovation among U.S. firms. Indeed, as our colleague Colin Grabow just noted, the recent Washington, D.C. Metro railcar debacle provides the latest example of Buy American’s many costs and risks.
• Most projects subsidized by the new infrastructure bill also must abide by the Davis-Bacon Act (Public-Private Partnerships would be exempt), which requires workers on federally funded infrastructure projects to be paid the “prevailing wage” (i.e. union wage) in the area, rather than the market wage. This requirement effectively excludes non-union construction workers and firms from working on federal infrastructure projects, despite the fact that only 12.8% of construction workers are unionized. It therefore reduces competition and labor supply, leading to higher costs and potentially lower quality. Indeed, because the “prevailing wage” is often significantly higher than comparable market wages, the Davis-Bacon Act can increase the costs of infrastructure projects by as much as 20 percent. No wonder, then, that an August 2021 report from the Congressional Budget Office estimates that repealing the law could save taxpayers $1 billion a year.
• Federal infrastructure projects are further bogged down by National Environmental Policy Act (NEPA) reviews, which are mandated when federal actions could “significantly affect” the environment – as most port projects surely would. In 2018, NEPA-required Environmental Impact Statements (EIS) took an average of 4.5 years to complete, significantly increasing both the cost and time needed to complete infrastructure projects. The Senate infrastructure bill, to its credit, includes reforms aiming to speed up the NEPA process for the most expensive projects (projected to cost over $200 million), but they are mainly aspirational, not mandatory, and haven’t worked in the past.

Third, all port expansion projects – not merely those funded by federal government – are severely burdened by the Jones Act and the Foreign Dredge Act, which collectively require that any dredging in U.S. waters be undertaken by American-built, ‑owned, ‑crewed, and ‑flagged ships. As Grabow explained in May, these restrictions, which many countries don’t have, dramatically limit the ships and workers available to dredge (and thus expand) U.S. ports, thus resulting in “high costs and unnecessarily lengthy timelines for the completion of urgently needed projects.” Eliminating these mandates would therefore speed port expansion projects and further reduce any need for taxpayer-funded dredging.

The current supply chain situation certainly merits public attention and government action. However, that action shouldn’t involve throwing even more taxpayer money (with strings attached) at the problem but instead reforming or repealing the many federal policies that burden our port and inland infrastructure systems and make the current situation far worse than it ever needed to be.

*Over $9 billion is allocated to the Army Corps of Engineers for dredging, port expansion, and other infrastructure priorities, with an additional $2.25 billion for the Port Infrastructure Development Program, which provides grants to port authorities, and $25 million for the Marine Highways Program.

Commutes in the Washington, DC area—already among the country’s worst—became even more frustrating this week when the Washington Metropolitan Area Transit Authority (WMATA) announced it was pulling roughly 60 percent of its subway cars from service. Instead of trains running every few minutes during the peak of rush hour, most lines will have service only twice per hour. Suffice to say, lengthy waits inside a subway station (“Metro station” in the local parlance) isn’t time well spent.

The service slowdown comes after inspections of subway cars following a recent derailment uncovered defects in the wheel and axle assembly. Delays are slated to last the remainder of the week, and some observers fear that ultimately resolving the issue could take years.

Overlooked in this whole mess, however, is that WMATA didn’t just buy apparently defective railcars but paid artificially inflated prices for them. Thanks to the use of federal funding, their purchase was subject to Buy American laws requiring at least 60 percent (since raised to 70 percent) of the railcar’s components to be U.S.-manufactured and that its final assembly take place domestically. Which is how it came to be that railcars sold by Japanese company Kawasaki were assembled in Lincoln, Nebraska.

Rather than being built in the location and with the materials deemed most efficient by the market, the production of railcars has been instead partly determined by the whims and desires of politicians spending other people’s money. That means higher costs and wasted dollars. According to the American Action Forum, had WMATA been able to purchase subway cars at the average cost paid by 14 foreign cities in various advanced economies for their own subway systems, the savings would have amounted to $441 million.

Perhaps unsurprisingly, WMATA is attempting to avoid Buy American requirements for its next major purchase of rolling stock (unfortunately, some of the savings will be undone through a requirement that 8 percent of the contract’s value remain in the mid-Atlantic region).

It’s just another sign that these laws shouldn’t exist in the first place. Besides frittering away taxpayer dollars and promoting self-impoverishment, Buy American requirements have other harmful effects such as reducing U.S. exports. Other countries can’t purchase U.S. products if Americans don’t purchase theirs—that’s what trade and mutual exchange are all about. Furthermore, such measures invite U.S. trading partners to impose similar restrictions, both to their own detriment and ours. 

If federal legislators are serious about improving the country’s infrastructure and truly “building back better” then the repeal of protectionist measures such as Buy American requirements would be an excellent place to start.

Over the last few weeks, I and other Cato scholars have explained how ubiquitous supply chain problems imperiling the American economic recovery resulted from not only short-term, pandemic-related issues, but also longstanding and misguided trade, labor, and other government policies that have decreased system-wide flexibility and efficiency that’s today so badly needed. Now, via the Journal of Commerce, we can add immigration and Mexican trucking restrictions to the list:

Beyond physical infrastructure investment, US and European governments need to ease migration rules to ensure there’s enough people to power the cargo to consumers, [DHL CEO Frank] Appel said. When the drivers aren’t there to haul goods and commodities, the impact is nearly immediate, as has happened in the UK, with panic runs on fuel in September and stockouts at grocers and fast-food restaurants. When there aren’t enough warehouse workers to unload trucks at shipper receiving facilities, as is currently the case in major US import markets, the slower circulation of chassis and containers backs up to the ports, creating further congestion.…

US long-haul truckload and less-than-truckload (LTL) operators were struggling to recruit drivers before the COVID-19 pandemic, and that’s only gotten more difficult. Despite the growth in volumes, there are 5,900 fewer long-haul truckers and 4,100 fewer LTL drivers operating in the US than there were in July 2018, according to Bureau of Labor Statistics data as analyzed by Jason Miller, an associate professor of logistics at Michigan State University.

The political climate during the Trump administration — and now under President Joe Biden — isn’t favorable to easing visa restrictions to allow foreign drivers to operate on US highways. Trucking companies face a steep challenge in making the case that the potential domestic driver pool is too shallow, considering higher salaries and better working conditions could theoretically fill more cabs.

Mexico has the largest and closest supply of potential US truck drivers, but the number of drivers who have come north of the border to haul is miniscule. Only 13 Mexican carriers with a total of 55 trucks were granted authority to operate in the US as part of a pilot program that ran from 2011 through 2014. The pilot has since expired, and tellingly, the United States-Mexico-Canada Agreement, the successor to NAFTA, doesn’t include any language to allow more Mexican drivers to take to the US roads.

Conversely, Canada has national and provincial initiatives to help foreigners immigrate and haul. Feeling similar driver recruitment pressures, the Canadian government is fast-tracking visa applications after overall immigration plunged during the pandemic. Canada’s openness to foreign drivers is baked into the country’s broader openness to immigration, whereas many Western governments are looking to further restrict who they allow in.

As my Cato colleague David Bier noted last week, massive U.S. visa backlogs are contributing to our current domestic labor shortage, which many port officials, importers, and logistics experts — echoing Appel above — blame for bottlenecks at various points in the supply chain. Adding insult to injury are the NAFTA/USMCA trucking restrictions (detailed in this 2013 Cato paper), which have long been supported by the Teamsters union despite Mexican trucks posing little risk — per the U.S. government itself — on American highways. In particular, U.S. restrictions on Mexican carriers affect the current supply chain situation in two ways:

• First, the total ban on Mexican truckers carrying freight within the United States prevents them from adding to badly-needed U.S. trucking capacity (e.g. hauling containers from West coast ports to inland warehouses);
• Second, the almost-total ban on Mexican carriers hauling freight between Mexico and inland U.S. destinations forces them to transfer cargo at the border to U.S. truckers (who then complete the voyage), thus reducing the number of American trucks available to go to seaports currently lacking drivers.

A once-in-a-generation pandemic all but ensured that global supply chain stresses would appear over the last 18 months, but these policies — and many others — are undoubtedly and needlessly making things worse. If President Biden really wants to improve U.S. supply chain resiliency over the long term, reforming these programs is a great place to start.

The pandemic has shocked every sector of the economy. Trade restrictions enacted by the Trump administration and maintained by President Biden have rippled through the U.S. economy but have particularly impacted U.S. ports. The pandemic highlighted that American ports have broader efficiency problems and could use some serious policy and management reforms.

On the west coast in particular, ship congestion has caused severe delays, wreaking havoc on the supply chain. While factories and ports in Asia are working 24/7 to supply American consumers with valuable goods, U.S. ports have been open for far fewer hours because labor union contracts dictate the hourly terms. However, after months of backlog, the ports of Los Angeles (LA) and Long Beach (LB) are finally switching to 24/7 shifts to move goods more quickly.

As a result of these union contracts, government offices are also not open 24/7. The ports of LA and LB account for almost half of all U.S. imports. The Customs and Border Protection (CBP) officials who must clear and admit goods do not work nights or weekends. These limits create additional pressure to have goods shipped to the United States during a prohibitive time frame, or leave ships idling around the ports until they can get in. The latter is the most common response. Recently, ships have been waiting an average of 12.5 days to enter the LA port. Ship idling has caused other problems too. Orange County, CA was affected by an oil spill that is suspected to have been caused by a pipeline hit with idling ship anchors. These differences in operating hours have caused huge ports efficiency losses that are felt across the country.

While it is positive that retailers, couriers, and the International Longshore and Warehouse Union (ILWU) are making changes to run ports more efficiently, permanent trade policy changes would help ease America’s coastal shipping problems.

The best policy would be to unilaterally remove tariffs by the United States. Simply eliminating tariffs would reduce an administrative burden both for traders and CBP officials. Duty-free trade would increase imports and exports but all other things equal, the freed-up CBP resources would help to move goods more swiftly through the ports.

However, a few smaller reforms could be implemented now that would considerably help the efficiency of U.S. ports. Removing Section 232 tariffs on steel and aluminum imports could temper the current domestic scarcity of some transportation-related goods, including chassis (the frame of a vehicle that holds containers). These materials are vital inputs for such products and the Section 232 tariffs are affecting American manufacturers’ ability to meet domestic demand. Eliminating duties and tariffs on transportation-related goods, including the 221 percent antidumping and countervailing (AD/CVD) duties and 25 percent Section 301 tariffs on Chinese chassis, could help increase the U.S. supply of chassis. While some freighters are paying the higher prices for Chinese chassis, the supply of transportation is still constrained, which has resulted in higher sticker prices on consumer goods.

As LA and LB move to 24/7 shifts, CBP offices should also be open 24/7. Given the sheer volume of trade these two ports process, it would seem sensible to make staffing 24/7 a permanent change at these ports, and at others depending on trade volumes.

Reforming the Jones Act could also help. All freight moved between U.S. ports must use U.S.-built, ‑crewed, and ‑flagged ships. As a result, traders circumvent these regulations by using alternative modes like trucks and trains. It would be prudent to reform the Jones Act to allow ships not in compliance with the Jones Act to pick up shipments in one U.S. port and unload at another. This would reduce pressure on inland transit that is currently being impacted by the aforementioned tariffs.

These bottlenecks have provided insight into the problems that exist at U.S. ports and with coastal shipping more broadly. Improvements in trade policy have a role to play and policymakers would be remiss not to consider permanent changes that would be beneficial now and could preempt pressures during future economic shocks.

Yuka Hayashi and Josh Zumbrun report in the Wall Street Journal that businesses are frustrated by “the Biden administration’s new China trade policy,” which sounds a lot like the Trump administration’s old China trade policy. Businesses were hoping for some tariff relief, but the administration says that’s not coming any time soon. At least, businesses had hoped, if the administration kept the tariffs, it “would again allow companies to appeal for exemptions from tariffs, a process that had mostly expired by the end of last year.” But not so much:

The Office of the U.S. Trade Representative said it would consider granting exclusion waivers on 549 product categories, a fraction of the more than 2,200 items that were eligible for tariff relief earlier in the Trump years.

It’s not obvious that the opportunity for waivers was all that useful, given that almost all requests were rejected, according to a chart accompanying the article based on GAO figures.

But in any case waivers are no way to run a trade policy, or a government. The rule of waivers is not the rule of law.

It’s understandable that those who suffer under government burdens would seek relief. And if a general repeal of the burdens doesn’t seem possible, then a waiver of its application to you or your company may seem like the next best thing. But such waivers add costs, complication, and additional unfairness to the process. And waivers seem to be an increasing feature of complicated and burdensome laws.

During the Obama administration, for instance, Secretary of Education Arne Duncan announced that he would unilaterally override the centerpiece requirement of the No Child Left Behind school accountability law, that 100 percent of students be proficient in math and reading by 2014. We’ve criticized that unrealistic requirement ourselves. But unrealistic or not, it’s the law. According to the New York Times:

Mr. Duncan told reporters that he was acting because Congress had failed to rewrite the Bush‐​era law, which he called a “slow‐​motion train wreck.”

Again, I too think Congress should rewrite — or repeal — this law. But alas, it hasn’t done so. Even the Times, often comfortable with the exercise of federal and executive power, notices that

The administration’s plan amounts to the most sweeping use of executive authority to rewrite federal education law since Washington expanded its involvement in education in the 1960s.

Which is a little misleading; in the 1960s Congress passed laws that extended federal power over local schools. The exercise of executive power is a different issue.


Duncan’s plan to waive bad provisions of a law was reminiscent of the more than 1,000 waivers from the provisions of the new health care law that Health and Human Services Secretary Kathleen Sebelius had already granted. During the Trump administration immigration law seemed to deteriorate into “arbitrary executive actions in which immigrants, workers, students, and visitors plead the government for waivers and exceptions under narrow and vague criteria set by the executive branch.“One problem with such waivers, of course, is the suspicion that they will be granted to the politically connected or even to political supporters. 

It seems we have come to live in a world where Congress passes vast, expansive laws that make grand promises and that few if any members of Congress actually read, and then inserts into them the power for the president or his appointees to waive sections of them when they become unworkable or bump up against the interests of the well connected. Philip Hamburger of Columbia Law School says waivers raise “questions about whether we live under a government of laws. Congress can pass statutes that apply to some businesses and not others, but once a law has passed — and therefore is binding — how can the executive branch relieve some Americans of their obligation to obey it?”

The Trump and Biden administrations’ tariffs on goods that Americans buy from Chinese sellers cost Americans money and reduce our standard of living. They should be lifted, especially now that there’s growing concern about inflation. In the meantime, maybe administrators should grant all the requests for exemptions and waivers. But we should stop passing laws that are so complex and so burdensome that waivers seem warranted. We’d be better off with fewer laws and regulations, simpler rules, and less need for waivers.