Trump’s theatrical tariff tactics: His Section 301 probe targets should keep watch and share notes

Over the past fortnight, investigations into 16 countries for supposed manufacturing “excess capacity” have been launched under Section 301 of the 1974 Trade Act. The office of US Trade Representative (USTR) Jamieson Greer also announced that similar probes would begin into forced labour practices in 60 countries. Several of America’s largest trade partners, including the EU, Japan, India and Mexico, will be on both lists.

One can safely assume that these 76 inquiries will proceed at a somewhat speedier rate than is usual and the answers will arrive with the same breathtaking rapidity at which the questions were asked. An even safer assumption is that these answers will just happen to be the ones that the Trump administration wants.

The White House is moving with commendable efficiency here, as it tends to do whenever it sets out to destroy institutions. Section 301 investigations serve a real purpose—identifying countries that are deliberately setting out to violate trading norms—and generally take months. Their purpose was to remove trade barriers, not raise them. It’s perverse to employ them as post-hoc scaffolding for a policy that’s already been declared unconstitutional.

The entire world can see what’s going on. Everyone knew that Trump’s response to the Supreme Court striking down his tariffs under the International Emergency Economic Powers Act (IEEPA) would be to find another law that lets him do exactly what he was just forbidden from doing. ‘No’ has never been Trump’s favourite word, and if there’s one skill that a certain sort of real-estate developer perfects, its forum-shopping.

The list of countries is a bit of a giveaway that this entire process is a legal fiction. Picture an army of worthy USTR officials solemnly poring over Bangladesh’s structural overcapacity in manufacturing with all the seriousness of purpose that the exercise demands. Then imagine them turning with equal care to cataloguing the forced-labour practices of Norway, one of the 60 countries being examined. Hard though it might be, the rest of the world will have to take this seriously. It’s far from certain that the courts will ride to the rescue again.

Yes, the margin on the IEEPA ruling was 6-3 and US Chief Justice Roberts was emphatic. But Section 301 is different. It outlines a process that must be followed, and this investigation, however theatrical, checks that procedural box. The world cannot assume that they will be struck down in toto again. The administration is counting on that; Greer has described these provisions as “incredibly legally durable.”

Washington has clearly learnt something from its failures over the past year. Have its counterparts in the rest of the world learnt anything from theirs?

First, is it safe to negotiate with Trump? As the EU has found out, he will relitigate his own deals even when he isn’t being forced by the Supreme Court. What his Section 301 probes do is reopen every deal done so far, whether with Korea, Japan, India or Southeast Asia. Must they go through the whole thing again? Can they?

Some, like Malaysia’s trade minister, think they will. The bilateral agreement that Trump signed with Prime Minister Anwar Ibrahim to considerable fanfare at the Asean Summit last year is “null and void,” the trade minister said: “It is not on hold. It is no longer there.” The deal was as dead as Monty Python’s parrot. It has ceased to be. Why should any country consider itself bound by agreements signed under coercive terms that a court has voided?

Over the past year, countries rushed to secure piecemeal deals; some allowed panic to overtake them; very few coordinated their actions or retaliations. Washington’s pretence at investigations does at least give the rest of the world time to consider whether that was the best approach to take.

The worst part, of course, is that like all Trump’s actions on trade, there is only one objective target. Only one country has enormous manufacturing overcapacity; only one large exporting economy has a structural problem with forced labour. But somehow Trump is too weak to take on China armed with fact, but strong enough to take on the entire world with fiction.

Using a more granular statute means there are many more points of weakness than there were with Trump’s reciprocal’ tariffs. Each application of Section 301 should be tested in the courts; every target of tariffs should talk to others about what it has learnt; the US Congress, if the balance of power shifts after midterms, will have to hold the USTR to account.

Nudging the US away from imagination and towards reality will not be easy. But it will have to be tried. ©Bloomberg

The author is a Bloomberg Opinion columnist.