U.S. Trade Policy: Tariffs, Trade Agreements, and Congressional Authority

U.S. trade policy is rooted in the Commerce Clause of the Constitution, which grants Congress authority to regulate commerce with foreign nations. Beginning with the Reciprocal Trade Agreements Act of 1934, Congress has progressively delegated tariff-setting and trade agreement negotiation authority to the President, while retaining oversight and approval authority for trade agreements that require changes to U.S. law. Trade Promotion Authority (TPA), which establishes objectives for trade negotiations and provides for expedited congressional consideration of implementing legislation, expired in 2021 and has not been renewed.

The U.S. has been a central architect of the multilateral trading system since World War II, participating in the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization. The U.S. also maintains a network of bilateral and regional free trade agreements with 20 countries. However, the consensus favoring trade liberalization has eroded in recent years, with increased attention to the distributional effects of trade, concerns about unfair trade practices by China and other countries, and a shift toward using tariffs and other trade measures to achieve industrial policy objectives.

The President possesses several statutory authorities to impose tariffs or other trade restrictions. Section 201 of the Trade Act of 1974 authorizes safeguard measures against imports that cause serious injury to domestic industries. Section 232 of the Trade Expansion Act of 1962 authorizes restrictions on imports that threaten national security. Section 301 of the Trade Act of 1974 authorizes retaliation against unfair foreign trade practices. The International Emergency Economic Powers Act (IEEPA) grants broad presidential authority to regulate commerce during national emergencies.

The USMCA governs trade relations with Canada and Mexico, the two largest U.S. trading partners. Key provisions include strengthened labor standards with a rapid response mechanism for labor rights violations, more stringent rules of origin for automotive products (requiring 75% regional value content), digital trade provisions prohibiting data localization requirements and customs duties on digital products, and a sunset clause requiring joint review every six years with automatic termination after 16 years unless extended.

Congress may consider several approaches to trade policy. Options include renewing Trade Promotion Authority with updated negotiating objectives, imposing statutory limits on the President's tariff authority (particularly under Section 232 and IEEPA), and establishing congressional approval requirements for certain trade actions. Legislation has been introduced to require congressional votes on tariffs above certain thresholds and to sunset tariff actions that have not been ratified by Congress.

Trade negotiation priorities include addressing China's industrial subsidies and forced technology transfer practices, negotiating digital trade and services agreements with allies, engaging with the Indo-Pacific Economic Framework, and determining the U.S. approach to WTO reform. Domestic policy options include strengthening trade adjustment assistance for workers and communities affected by trade, enhancing customs enforcement against forced labor and circumvention, and investing in supply chain resilience for critical goods.

The U.S. trade deficit in goods reached record levels in 2024, fueling continued debate over tariff policy. Additional tariff increases on Chinese imports in strategic sectors including electric vehicles, semiconductors, solar cells, and critical minerals were implemented in 2024. The USMCA's first joint review is scheduled for 2026, with automotive rules of origin, energy provisions, and dispute settlement effectiveness expected to be key issues. Congress has conducted oversight hearings on the use of presidential tariff authority and the economic effects of existing tariffs on consumers and domestic manufacturers.