The "United States Fair and Reciprocal Tariff Act” would free Trump from congressional oversight and allow him to ignore two of the WTO’s most basic principles:
- The "Most Favored Nation" (MFN) principle that countries can't set different tariff rates for different countries outside of free trade agreements;
- "Bound tariff rates" — the tariff ceilings that each WTO country has already agreed to in previous negotiations.
A source familiar with the draft legislation told Axios, "It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” but added the caveat that “Congress would never give this authority to the president.”
"It's not implementable at the border," given it would create potentially tens of thousands of new tariff rates on products. "And it would completely remove us from the set of global trade rules."
Axios also learned that Trump was briefed on the bill in May, but most who involved in its crafting believe the plan untenable – one source privy to the draft called the legislation “insane”.
In a White House meeting to discuss the bill earlier this year, Legislative Affairs Director Marc Short bluntly told Navarro the bill was "dead on arrival" and would receive zero support on Capitol Hill, according to sources familiar with the exchange.
Navarro replied to Short that he thought the bill would get plenty of support, particularly from Democrats, but Short told Navarro he didn't think Democrats were in much of a mood to hand over more authority to Trump.
White House spokeswoman Lindsay Walters said the bill should not be considered a done deal and is simply one option under consideration:
"It is no secret that POTUS has had frustrations with the unfair imbalance of tariffs that put the U.S. at a disadvantage. He has asked his team to develop ideas to remedy this situation and create incentives for countries to lower their tariffs. The current system gives the U.S. no leverage and other countries no incentive."
"The only way this would be news is if this were actual legislation that the administration was preparing to rollout, but it’s not," she said. "Principals have not even met to review any text of legislation on reciprocal trade."