The Executive Branch has expanded its powers beyond the vision of the American founders—far beyond. Its agencies have practically become a fourth branch of government. With powers ceded by Congress, they issue thousands of pages of regulations each year, effectively creating new statutory law. This runs against the spirit of the Constitution. It imposes a good deal of uncertainty and high compliance costs on businesses, depressing economic activity.
The president has less de facto control of the executive regulatory agencies than he ought to have as the head of the Executive Branch. But he himself also has too much power. One example now conspicuously in the public eye is the de facto powers the president now enjoys to unilaterally tax imported goods—that is, to levy tariffs.
According to the Constitution, the power to levy taxes lies with Congress. Article I, Section 8 reads: “The Congress shall have the Power to lay and collect Taxes, Duties, Imposts, and Excises.” In the beginning, tariff schedules, like all federal tax schedules, were determined by Congress. Tariffs were the main source of federal revenue into the early twentieth century, prior to the establishment of the federal income tax in 1913. The prospect of the president unilaterally determining the particulars of any tax, let alone such an important array of taxes for revenue purposes, would have appeared unjust to many of our founders.
The initial delegation of tariff powers arguably took place for a well-intentioned reason. But it has gone too far. Irrespective of one’s position on tariffs, supporters of limited government constrained by a system of checks and balances should be concerned with how much of our trade policy transpires.
A Short History of Congressional Delegation
Congress began to delegate its tariff powers to the Executive Branch in 1934. At the encouragement of the Secretary of State Cordell Hull, Franklin Roosevelt secured the passage that year of the Reciprocal Trade Agreements Act (RTAA). The RTAA was the Democratic response to the disastrous Tariff Act of 1930, better known as the Smoot-Hawley Tariff Act. The Smoot-Hawley Act was signed into law by the Republican president Herbert Hoover. Hoover had campaigned on a pledge to protect domestic agriculture. After his election, protectionist elements in the Republican party—led by Senator Reed Smoot and Representative Willis Hawley—seized on his proposal to raise agricultural tariffs and added a broader range of industrial protections to an omnibus tariff bill. After Smoot-Hawley, average dutiable tariffs in the US increased to about 59 percent. The Act triggered retaliatory tariffs worldwide and contributed to the severity of the Great Depression in its early years.