Trade Expansion Act

The Trade Expansion Act of 1962 (Pub. L. 87–794, 76 Stat. 872, enacted October 11, 1962, codified at 19 U.S.C. ch. 7) is an American trade law.

The law was intended to maintain American economic influence in the wake of the creation of the European Economic Community.

The Trade Expansion Act granted the president of the United States unprecedented authority to negotiate tariff reductions of up to 50%. It paved the way for the Kennedy Round of General Agreement on Tariffs and Trade (GATT) negotiations, concluding on June 30, 1967, the last day before expiration of the Act.

Section 232 of the act permits the president to impose tariffs based on a recommendation by the U.S. secretary of commerce if "an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security." This section was used only in 1979 and 1982, and had not been invoked since the creation of the World Trade Organization in 1995, until President Trump cited it on March 8, 2018, to impose tariffs on steel and aluminum.

In the early 1960's US politicians were worried about the growing influence of the European Economic Community and the ever-present influence of the Soviet Union. President John F. Kennedy determined that a loosening of trade restrictions would spark an increase in economic growth and keep the American economy competitive. Therefore, they began to champion a new trade act that would give the President the authority to revamp US trade policy. Republicans and some industry leaders were initially skeptical, however, and believed that a loosening of trade policy would cause significant harm to American domestic industries and workers, especially amidst a persistent unemployment issue.

The act's stated purpose is to stimulate the US economy through the lowering of trade barriers, with a focus on countering Communist economic influence. To accomplish this goal the act granted the President a 5-year authority to reduce or increase tariffs by a maximum of 50% the initial level. The President was also empowered to eliminate trade barriers on goods that the United States and EEC combined accounted for at least 80% of the market, with agricultural products being exempt to the 80% rule. A "Tariff Commission" would also be created that was tasked with advising the President on the economic effect of adjustments to tariff policy. The law also created the Office of the United States Trade Representative. This office would serve as the primary negotiator with foreign countries concerning trade. The President and the Tariff Commission would also be required to submit annual reports to congress on their activities under the act. Many, however, were concerned about negative impacts to domestic industries as a result of these adjustments, to soften the blow a system was created that would allow industry leaders, firms, and workers to submit petitions to the Tariff Commission for relief. In the event the Tariff Commission found that damage was done as a result of the new trade policies it would require the President to offer assistance. This could take many forms; The President could invoke the "Escape Clause" which allowed the president to rapidly raise tariffs again. The President could also provide monetary aid to businesses in the form of loans or tax-breaks. Workers could be eligible to receive unemployment aid or even retraining. Another avenue would be the imposing of international quotas to protect industries.

The act started its journey with a massive public relations campaign spearheaded by the Kennedy administration. The goal of the campaign was to frame the act as necessary in order to maintain national security. The campaign also sought to reach out to important interest groups, highlighting how they could benefit from the reforms in the proposed legislation.