Why Senator Rand Paul Opposes Tariffs: Economic, Constitutional, and Political Concerns
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The President of the United States is a powerful man. Controlling one third of the federal government is pretty heady stuff. Which is why, when members of the president’s own party stand against him, it is notable. We expect the opposition party to do so, but resistance within the president’s party is a “man bites dog” story. But this is exactly what is happening, as of this writing, on President Trump’s tariff proposals. Virginia Senator Tim Kaine (D) introduced a resolution to reverse some actions targeting Canadian trade. It is always difficult to know if an opposing party member is taking a stand or playing politics. Kaine’s statement, “I really relish giving my Republican colleagues the chance to not just say they’re concerned, but actually take an action to stop these tariffs,”[1] could be taken several ways, but it was a bill that attracted four Republican Senators’ votes and, assuming a united Democratic party, this coalition could stop other efforts. Seemingly the most outspoken of the four is Senator Rand Paul of Kentucky. (The other three are Susan Collins of Maine, Lisa Murkowski of Alaska, and Mitch McConnell of Kentucky. What’s going on in Kentucky?)
Senator Paul has consistently opposed tariffs. It could be argued that he was opposed to them before he was born. His father, former Texas Congressman and presidential candidate Ron Paul was (and still is) a staunch opponent of tariffs for his entire political career. Senator Paul is making a three-point argument on the issue that is worth examining.
The Economic Case
I explored this in more detail in a previous essay, but to summarize: Paul accurately points out that a tariff is a tax, and governments can only tax their own people. As the Senator said in an interview recently: “Tariffs don’t punish foreign governments. They punish American families. When we tax imports, we raise the price of everything — from groceries to smartphones to washing machines to prescription drugs.”[2] As I explained in my previous essay on tariffs, this reasoning is essentially correct with the possible caveat that on some products the foreign manufacturer (not government) may pay more (not all) of the tax than the American consumer. But the bottom line is a tariff is a tax, and it works like all taxes do: higher prices and less supply.
The Constitutional Case
Senator Paul is also making the case that the Constitution only empowers Congress with the power to tax. The Senator introduced legislation reflecting this fact, described on his Senatorial website as legislation that “reins in the executive branch’s abuse of tariff authority by requiring Congressional approval before any new import taxes can be imposed. The bill aims to strengthen our system of checks and balances by requiring Congressional consent for any tariffs. … By restoring the role of Congress in the taxation process, the bill ensures greater accountability, transparency, and long-term economic stability.”[3] Obviously, there is interpretational diversity, but from a strict Constitutionalist/originalist view, this clause (Article 1, Section 8); “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”[4] seems pretty clear. But is goes on to say Congress has the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes…”.[5] There is no mention of such powers in the Article 2, which deals with the power of the presidency.
The Political Case
Senator Paul also makes a political case, based on history. The Republican Party has been the stronger advocate for tariffs in American history, starting with the first Republican President, Abraham Lincoln. Paul has surveyed this history and recently stated to Fox News: “Tariffs have also led to political decimation, when [former President William] McKinley most famously put tariffs on in 1890, they [Republicans] lost 50 percent of their seats in the national election. When [Smoot-Hawley, Republican Congressional leaders] put on their tariff in the early 1930s, we lost the House and the Senate for 60 years. So, they’re not only bad economically, but they’re also bad politically.”[6] There are many factors that contribute to an election outcome and when McKinley got his tariff package passed, he was Chairman of the House Ways and Means Committee. He did lose his re-election by 300 votes (after very unfavorable re-districting) but was elected Ohio Governor the following year and President 4 years after that, embracing the tariff from his front-porch campaign. But tariffs did not bring an electoral boon to the Republicans in these cases.
Final Thoughts
Tariffs have been part of U.S. economic and foreign policy since 1789 and before. They can be part of a larger foreign policy and may be the best way to accomplish some foreign policy goals: President Trump talks of stemming the fentanyl influx and addressing intellectual property violations. But as a pure economic policy with goals of building domestic production, they fall victim to what the 19th century French economist/satirist/ journalist/politician Frederic Bastiat described as the unseen. It is easy to see the jobs saved and firms preserved by the protective nature of tariffs, but what of the unseen: the jobs never created, inventions delayed, and new businesses never started because of the diversion of resources towards protecting the less efficient? In the end, we should heed Adam Smith in this as in most economic matters: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. … What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”[7]
[1] https://apnews.com/article/tariffs-canada-congress-kaine-8e4d8f79f7ae43d83ca0c7269c23f81c
[2] https://www.newsweek.com/tariffs-donald-trump-republican-critics-full-list-2055640
[3] https://www.paul.senate.gov/dr-rand-paul-reintroduces-bill-to-shield-americans-from-the-high-costs-of-tariffs/
[4] https://constitution.congress.gov/browse/article-1/section-8/
[5] https://constitution.congress.gov/constitution/
[6] https://www.msn.com/en-us/news/politics/republican-senator-warns-trump-tariffs-may-spur-political-decimation/ar-AA1CeH7l
