How Trade Policy Is Made: Tariffs, Treaties, and the Congress-President Relationship
The Constitution places foreign commerce squarely within Congress's authority. In practice, presidents impose tariffs by executive action, negotiate trade agreements that reshape entire sectors of the economy, and exercise authority that Congress delegated decades ago and has not reclaimed. Understanding that gap between constitutional text and operational reality is the starting point for making sense of trade debates.
Published June 26, 2026Article I of the Constitution grants Congress the power “to regulate Commerce with foreign Nations” and to “lay and collect Taxes, Duties, Imposts and Excises.” Tariffs are squarely a congressional power under the founding document. Yet for most of the postwar period, and with increasing intensity in recent decades, presidents have set tariff rates, negotiated and implemented trade agreements, and wielded trade policy as a tool of foreign relations with limited real-time congressional involvement. That evolution happened through a series of explicit congressional delegations, and understanding them explains how trade policy is actually made.
The historical shift from Congress to the executive
Through the nineteenth century, Congress set tariff rates directly, through legislation. The 1930 Smoot-Hawley Tariff Act, which dramatically raised duties on imported goods and contributed to a collapse in global trade during the Great Depression, is the last major instance of Congress legislating detailed tariff schedules. The catastrophic result prompted a rethinking of the institutional arrangement. Congress in 1934 passed the Reciprocal Trade Agreements Act, delegating to the president the authority to negotiate bilateral tariff reductions with other countries. The logic was that Congress, composed of members each protecting constituent industries, was institutionally prone to protectionist logrolling, while the executive could take a broader national view.
That delegation was not permanent; it required periodic renewal and came with limits. But it began a shift that subsequent legislation extended. Congress has continued to delegate trade negotiating authority to the executive while retaining oversight mechanisms, creating a partnership that has worked smoothly during periods of bipartisan consensus on trade liberalization and tensely when that consensus broke down.
Trade agreements and fast track authority
International trade agreements present a constitutional puzzle. A formal treaty requires two-thirds approval in the Senate. But trade agreements typically require changes to domestic law — tariff reductions, intellectual property rules, investment protections — that require both chambers to act. Presenting a negotiated trade agreement to Congress as a formal treaty, subject to amendment, would expose it to unraveling through hundreds of modifications, making it impossible to honor the commitments made to negotiating partners.
Congress solved this problem by creating what is variously called fast track authority or trade promotion authority. Under this arrangement, the president can negotiate a trade agreement and submit it to Congress as implementing legislation, which both chambers vote on under a guaranteed timeline without amendment and with simple majority approval. Congress effectively pre-commits to a straight up-or-down vote in exchange for being consulted during the negotiating process. Fast track authority must be renewed periodically and has not always been available; some trade agreements were negotiated and implemented during periods when it lapsed, creating complications.
Tariffs as presidential tools
Beyond trade agreements, presidents have accumulated broad unilateral authority to impose tariffs through statutory delegations. Section 232 of the Trade Expansion Act of 1962 allows the president to impose tariffs on imports that threaten national security, a standard that administrations have interpreted broadly to include steel, aluminum, and automobiles. Section 301 of the Trade Act of 1974 allows the executive to respond to foreign trade practices that are unreasonable or discriminatory. The International Emergency Economic Powers Act allows the president to impose tariffs in response to a declared national emergency. Each of these statutes was passed by Congress and delegates real authority; the president cannot impose tariffs without some statutory hook.
The scope of these delegations has become contested. When the Trump administration used Section 232 to impose tariffs on steel and aluminum from close allies, citing national security, trading partners challenged the action at the World Trade Organization and Congress debated whether to reclaim tariff-setting authority. The debate over whether congressional delegations of tariff authority have become so broad that they effectively surrender congressional power over trade is one of the live constitutional arguments in trade law.
The World Trade Organization
Since 1995, American trade policy has operated within the framework of the World Trade Organization, which sets rules for international trade, provides a dispute resolution mechanism, and limits the tariff rates member countries can charge on imports — the bound tariffs each country committed to when joining. Countries can impose tariffs up to their bound rates; exceeding them is a violation of WTO commitments that can lead to authorized retaliation by affected trading partners.
The WTO dispute resolution system has been strained by US actions that other members have challenged. The United States has blocked appointments to the WTO Appellate Body, effectively disabling the dispute system's final review layer. The future of the rules-based multilateral trading system is a contested question in international relations and trade policy.
Who gains and who loses from trade policy
Trade policy involves real distributional consequences that economic analysis has become better at tracing. Trade liberalization generally reduces prices for consumers and expands export opportunities in sectors where a country is competitive, but it also exposes workers in import-competing sectors to job loss and wage pressure that can be severe and geographically concentrated. Research on the “China shock” of the 1990s and 2000s found that manufacturing job losses from increased Chinese imports were larger and more persistent than earlier trade models had suggested, and that trade adjustment programs designed to help displaced workers were inadequate to the actual scale of displacement.
That research reframed the politics of trade. The bipartisan consensus in favor of liberalization that had governed US trade policy since the 1940s fractured, and trade agreements became politically contested in ways that their architects had not anticipated. The distributional question — who gains from lower consumer prices versus who bears the cost of import competition — has become central to trade policy debates in a way it was not during the period of elite consensus on liberalization. Making sense of current trade debates requires engaging with those distributional arguments rather than treating trade as a purely technical matter settled by comparative advantage theory.