A joint resolution terminating the national emergency declared to impose duties on articles imported from Canada.

— 801 — Trade l Repeal the Jones Act,48 a century-old “Buy American” maritime law that has decimated the U.S. shipbuilding industry. l Work with Congress to restore the President’s Trade Promotion Authority, which would expedite the negotiation of trade agreements with the United Kingdom, Switzerland, Taiwan, the European Union, and other allies, and keep trade-unrelated provisions out of trade agreements. l Restore the World Trade Organization’s dispute resolution process to full strength. l Create a successor to the WTO (assuming that it has been fatally wounded) that is open only to liberal democracies. This would prevent authoritarian countries like China from abusing the organization for their own ends. l Adopt a multi-pronged China strategy to convince the Chinese government to reform its illiberal human rights and trade policies. l Rejoin the Trans-Pacific Partnership (TPP), whose 11 members are developing institutional trade norms in an important geopolitical region without U.S. input or involvement. l Reorient the proposed Indo-Pacific Economic Framework for Prosperity to focus only on trade issues, which it currently ignores in favor of progressive wish-list policies. l Strengthen diplomatic pressure (in concert with allies) against Beijing’s abuses. Encourage cultural and intellectual engagement with the Chinese people, remembering that blue jeans and rock ’n’ roll helped to win the Cold War. Tariff Relief. When people try something repeatedly and it still doesn’t work, they should stop doing it—especially when the consequences turn out to be just what conservative economists have long predicted they would be.49 With tariffs, the proper reform is not only to get rid of the individual tariffs that have backfired, but also to build institutional safeguards against future abuse. We are five years into the biggest experiment with tariffs since the Great Depres- sion, and the results are in: The new tariffs raise consumer prices for ordinary Americans by about $1,200 per household every year50 and benefit only a small number of special interests. Steel and aluminum tariffs, enacted on national security grounds, angered allies. Beijing made not a single substantive reform in — 802 — Mandate for Leadership: The Conservative Promise response to four rounds of tariffs plus an attempted Phase One agreement. The Biden Administration has left the tariffs in place and is expanding them to pursue progressive policy goals. The first order of business for a new Administration that is focused on American workers and consumers is to repeal all tariffs enacted under Section 232 of the Trade Expansion Act of 196251 and Sections 201 and 301 of the Trade Act of 1974.52 The President can do this unilaterally, and Congress can do it through legislation. The second order of business requires Congress to pass legislation repealing Sections 232, 201, and 301. The U.S. Constitution places all taxing authority with Congress53 and none with the President. Congress used those provisions of law to delegate some of its taxing authority to the President because it was having trouble passing “clean” tariff legislation in the 1960s and 1970s. Unless and until this constitutional question about delegation is addressed, important reforms are available to the next Congress and the next President. Congress faced a problem of collective action in the 1960s and 1970s. As a whole, Members generally wanted to lower tariffs, but few individual Members were will- ing to remove tariffs that benefited special interests in their districts. Trade bills were invariably watered down through amendments and logrolling. The thinking was that the President, whose constituency is the entire nation, would be less prone to special-interest pleading than Members of Congress would be, so Congress del- egated some of its tariff-making authority to the President in 1962 and 1974 trade legislation. Delegating tariff-making might have worked in the short run, but in the long run, it was both constitutionally dubious and ripe for abuse. That came to pass in 2018. The Section 232 steel and aluminum tariffs, invoked in 2018 against Canada, Europe, and other allies on national security grounds, raised car prices by an aver- age of $250 per vehicle and gave America the world’s highest steel prices. They also harmed the construction, canned food and beverage, and other metal-us- ing industries. While this may have benefited the steel industry itself, each steel job saved cost an average of $650,000 per year that had been taken from elsewhere in the econo- my.54 That is no way to strengthen American manufacturing. The New York Federal Reserve estimated in 2019 that the Section 301 China tariffs cost the average house- hold $831 per year,55 a figure that has likely increased with inflation. The new tariffs have a clear record of failure—as conservative economists almost unanimously warned would be the case. Job number one for the next Administration is to return to sensible trade policies and eliminate the destruc- tive Trump–Biden tariffs. Strengthening American Manufacturing. The decline of American manu- facturing is a common political trope in both parties, typically invoked before a call for more government intervention. This narrative has several problems. One is that

— 802 — Mandate for Leadership: The Conservative Promise response to four rounds of tariffs plus an attempted Phase One agreement. The Biden Administration has left the tariffs in place and is expanding them to pursue progressive policy goals. The first order of business for a new Administration that is focused on American workers and consumers is to repeal all tariffs enacted under Section 232 of the Trade Expansion Act of 196251 and Sections 201 and 301 of the Trade Act of 1974.52 The President can do this unilaterally, and Congress can do it through legislation. The second order of business requires Congress to pass legislation repealing Sections 232, 201, and 301. The U.S. Constitution places all taxing authority with Congress53 and none with the President. Congress used those provisions of law to delegate some of its taxing authority to the President because it was having trouble passing “clean” tariff legislation in the 1960s and 1970s. Unless and until this constitutional question about delegation is addressed, important reforms are available to the next Congress and the next President. Congress faced a problem of collective action in the 1960s and 1970s. As a whole, Members generally wanted to lower tariffs, but few individual Members were will- ing to remove tariffs that benefited special interests in their districts. Trade bills were invariably watered down through amendments and logrolling. The thinking was that the President, whose constituency is the entire nation, would be less prone to special-interest pleading than Members of Congress would be, so Congress del- egated some of its tariff-making authority to the President in 1962 and 1974 trade legislation. Delegating tariff-making might have worked in the short run, but in the long run, it was both constitutionally dubious and ripe for abuse. That came to pass in 2018. The Section 232 steel and aluminum tariffs, invoked in 2018 against Canada, Europe, and other allies on national security grounds, raised car prices by an aver- age of $250 per vehicle and gave America the world’s highest steel prices. They also harmed the construction, canned food and beverage, and other metal-us- ing industries. While this may have benefited the steel industry itself, each steel job saved cost an average of $650,000 per year that had been taken from elsewhere in the econo- my.54 That is no way to strengthen American manufacturing. The New York Federal Reserve estimated in 2019 that the Section 301 China tariffs cost the average house- hold $831 per year,55 a figure that has likely increased with inflation. The new tariffs have a clear record of failure—as conservative economists almost unanimously warned would be the case. Job number one for the next Administration is to return to sensible trade policies and eliminate the destruc- tive Trump–Biden tariffs. Strengthening American Manufacturing. The decline of American manu- facturing is a common political trope in both parties, typically invoked before a call for more government intervention. This narrative has several problems. One is that — 803 — Trade American manufacturing output is currently at an all-time high. The record was not set during World War II and not during the 1950s boom. Output did not peak when manufacturing employment peaked in 1979 or during the Reagan economic revival in the 1980s. It is actually higher now than it has ever been. American manufacturing is buoyant because each manufacturing worker’s pro- ductivity is also at an all-time high. The key to prosperity is doing more with less. The next President should ignore special interests and populist ideologues who want government to do the opposite through industrial policy, trade protectionism, and other failed progressive policies. It takes surprisingly few people to achieve America’s record-high manufac- turing output—currently about 13 million people out of a workforce of more than 160 million, compared to the 1979 peak of 19.5 million people out of a workforce of 104 million.56 Productivity growth has freed the time and talents of millions of people for other, additional uses. The belief that manufacturing has to shrink for services to grow is the zero- sum fallacy against which sensible economists often warn. It is anathema to the optimism, hope, and confidence that are the natural birthright of conservatives. Growing productivity enables more output of both manufacturing and services. That is why America continues to have sustained booms and record-setting real GDP despite the long-run decline in manufacturing employment. Economists distinguish between two types of growth: extensive and intensive. Extensive growth is the Soviet and Chinese model for manufacturing: If you have more people use more resources, they will create more output. Extensive growth is doing more with more; intensive growth is doing more with less. That is where America’s superpower lies. The story of American manufacturing is one of intensive growth dating back to our agricultural origins. Conservative leaders should draw on this history to position America for continued success. With intensive growth, it is not manufacturing or services; it is manufacturing and services. Retaliatory Tariffs. Raising tariffs on another country almost always invites retaliatory tariffs against the U.S. The latter tend to be directed at politically sen- sitive American exports. Retaliatory tariffs by both China and American allies in response to the 2018 steel tariffs were targeted primarily at American agriculture. According to the U.S. Department of Agriculture, those tariffs cost farmers $27 billion with losses concentrated particularly in heartland states.57 Retaliatory tariffs also targeted U.S. industries that were not protected by tar- iffs. Many imports become inputs into U.S. manufacturing. The motorcycle maker Harley-Davidson was already facing higher production costs as domestic steel producers raised their prices to accommodate the new steel tariff. A retaliatory tariff on its motorcycles imposed by the European Union further raised its prices and hurt its export business. Harm to such innocent bystanders was another unin- tended (though foreseen) consequence.

— 808 — Mandate for Leadership: The Conservative Promise failure point crashed the whole system. It should not be that way, and the next President can change it. Part of the problem is that the supply chain analogy itself causes sloppy thinking. In a chain, a link is connected only to the link ahead of it and the link behind it and not to any other links. Real-world supply chains are more like networks in which each point connects directly to countless others and is rarely more than six degrees of separation from nearly anywhere on Earth. Because market failures happen all the time, it is important to have as many connections as possible. Americans need access to more ways to adapt and reroute around failure points, especially for essential products like baby formula. Trade protectionism makes us more vulnerable, but free trade makes our fam- ilies and communities more resilient. Loosening restrictions similar to the ones that stunt the baby formula market would make it easier to navigate future crises while preventing the progressive and rent-seeking power grabs that come with every crisis, whether it is as isolated as a baby formula shortage or as expansive as a pandemic. Mutual Recognition. A simple way to reduce friction in supply networks is mutual recognition of other industrialized countries’ regulatory standards. This can be done either in a larger trade agreement or independently. For baby for- mula, this would mean allowing in brands that meet European Union standards even if they do not meet Food and Drug Administration (FDA) labeling require- ments. Infants’ nutritional needs do not change across borders. If a formula is deemed healthy for European babies, then it is also healthy for American babies. The reverse is equally true. Mutual recognition could help to open new markets for American producers in countless industries and give American consumers access to countless new prod- ucts on more competitive terms. For example, U.S. regulations require washing machine power cords to be at least six feet long, while the U.K. requires them to be at least two meters.69 The difference (about six inches) affects neither safety nor performance, but it does keep American-made washing machines out of an import- ant foreign market. A mutual recognition policy would circumvent the problem. Given the recent interest in increased antitrust enforcement, conservatives should embrace policies like mutual recognition that have the double benefit of increasing market competition while decreasing government’s regulatory footprint. The U.S. should enact mutual recognition agreements for a wide variety goods with the United Kingdom, European Union, Japan, South Korea, Australia, and other governments with high standards comparable to our own. This would have especially large benefits for pharmaceuticals, because America’s FDA drug approval process is both slower and more expensive than those of other countries with- out being any safer. Americans would gain access to more and lower-cost medical — 809 — Trade treatments, and American pharmaceutical companies could defray development costs and innovate faster by gaining access to more markets, all while cutting prices. The Jones Act. The Jones Act (Merchant Marine Act of 1920)70 requires that ships traveling between U.S. ports must be U.S.-built, U.S.-owned, and U.S.-crewed. In practice, this is an “America last” policy that has decimated the American mari- time industry.71 Because of Jones Act regulations, American-built ships cost three to four times more to build than foreign-built ships cost. As a result, the entire Jones Act fleet is down to just 92 ships, many of which are old and obsolete. In fact, Jones Act–compliant shipping is so expensive that it is often cheaper for East Coast ports to import oil from Vladimir Putin’s Russia than it is to send it up the coast from Houston or New Orleans. The national security (to say nothing of energy security) implications of reliance on Russia for oil and gas are obvious. The Jones Act’s original national security justifications are just as dubious. The act’s goal was to guarantee a sizable fleet of American ships that could be pressed into war service if needed. Aircraft carriers and other post-1920 naval innovations have made this argument obsolete. An $800 billion defense budget has plenty of room to maintain a Navy to defend American security interests around the world. The U.S. Navy would likely prefer not to use Jones Act ships anyway, because they tend to be older and in poorer condition than its own ships or similar foreign-made but domestically owned commercial ships that could also be pressed into service. As with many other industries, U.S. shipbuilding could be the envy of the world if it could operate in a free market, but the maritime lobby prefers a quiet, cozy exis- tence on the dole even as it harms American consumers and national security. The next conservative Administration should unleash American potential by unilater- ally enacting Jones Act exemptions wherever allowed, as currently happens most years during hurricane season, and working with Congress to repeal the Jones Act. Trade and Inflation. The post-COVID inflation spike may be over long before the next Administration takes office, but keeping it under control should remain a high priority. Free traders should not oversell their case by saying that liberal- ization would solve inflation. Inflation is predominantly a monetary phenomenon, not a trade phenomenon, but tariff relief can help at the margin by immediately lowering prices on tariffed goods and slightly boosting long-term growth.72 While this would not affect the money supply, which is inflation’s key variable, even roll- ing back the tariffs enacted since 2017 would likely have a positive effect on the Consumer Price Index. The easiest way to curb inflation (or to create it) is for the Federal Reserve to work the monetary side of the equation, but the real output side has a similar effect on prices. Lifting trade barriers is one way to boost output. It also has the added benefit of requiring no additional spending. At the very least, this can make the Federal Reserve’s job easier as the spending excesses of Congress and President Biden continue unabated in the coming years.