Immediately after the Supreme Court struck down President Trump’s bold Executive Orders on international trade, Washington pulled from its sleeve a seldomly used trick called Section 122 sanctions. That allows a nation to enact temporary tariffs because too much of its currency is headed overseas which imbalances its trade deficit and spikes inflation.

It’s of little surprise to us in the international trade arena: Many previous administrations, on both sides of the aisle, have done the same. A carte blanche. But this time the administration pushed too far into what is unquestionably under the statutory purview of Congress.

Doubling down

Trump doubled down on what the White House surely already researched and scripted. Section 122 bypasses the need for a Congressional vote which would have taken months of bickering. We who are appointed advisors in the international trade sector and the U.S.’s envoys spent many months forging a deal get frustrated which then gets torpedoed by a handful of Congressmen at the last minute even though they had every opportunity to opine on it as a negotiation was in the works.

The carrot and the stick

The United States is fortunate to wield both the carrot and the stick: The carrot is access to by far the world’s biggest buyer (countless manufacturers I met with in Asia steer some 85% of their production for export to the U.S). The stick is to close that opportunity with tariffs and non-tariff barriers. That stick is normally to counter ill behavior or protect U.S. manufacturers from government-subsidized product that could flood our market.

So who’s paying for all this?

The tariffs are something built into contracts between exporter and importer. In the end, consumers end up paying for some of it. It stings but most countries levy far higher tariffs on our exports than we do their imports. The big picture should be kept in mind.

Uncertainty

We can stomach reasonable tariffs but we cannot stomach the uncertainty of what will be announced weekly. We wish they would quit moving the goalpost.

Stay tuned, all may change over the coming weeks.