Fair Trade Act of 2026

Bill Number

H.R. 6991

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Foreign Trade and International Finance

Status

Introduced

Latest Action

2026-01-08: Referred to the House Committee on Ways and Means.

Last Updated

2026-01-22T20:37:01Z

AI-Generated Summary

Purpose

The Fair Trade Act of 2026 aims to promote balanced trade by imposing additional tariffs (taxes on imports) on goods entering the United States. These tariffs are designed to address trade imbalances, applying higher rates to imports from countries where the U.S. has a trade deficit (imports exceed exports) compared to those with a surplus (exports exceed imports).

Key Provisions

• Tariff Rates:
• A 10% ad valorem duty (a tax calculated as a percentage of the imported good's value) on all goods from countries where the U.S. has a trade surplus.
• A 15% ad valorem duty on all goods from countries where the U.S. has a trade deficit.
• Effective Date and Scope: The duties apply to all imported goods starting from the calendar year of the bill's enactment and continue annually thereafter.
• Addition to Existing Duties: These new tariffs are imposed on top of any pre-existing import duties or taxes already required by law.
• Presidential Flexibility:
• The President may lower the tariff rates (but not eliminate them entirely) for specific goods if it serves the national interest or national security.
• Before making such reductions, the President must consult with the House Committee on Ways and Means and the Senate Committee on Finance to assess appropriateness.

Significant Changes to Existing Law

• This bill introduces a new, automatic tariff structure based solely on bilateral trade balances (surplus or deficit with individual countries), which is not currently part of U.S. trade law.
• It modifies existing tariff authority by adding these universal surcharges without needing case-by-case determinations, though it includes limited presidential adjustment powers.
• Unlike prior laws (e.g., those under the Trade Act of 1974), it does not tie tariffs to unfair trade practices like dumping or subsidies but focuses purely on overall trade imbalances.

Potential Impacts

• On Government Agencies: U.S. Customs and Border Protection would enforce collection of these additional duties, potentially increasing administrative workload and revenue for the federal government (estimated billions annually depending on trade volumes).
• On Citizens: American consumers and businesses reliant on imports could face higher prices for goods, leading to inflation in sectors like electronics, clothing, and machinery. Domestic producers might benefit from reduced foreign competition.
• On International Relations: Trading partners, especially those with U.S. deficits (e.g., China, Mexico), may view this as protectionist, potentially sparking retaliatory tariffs or trade disputes. Countries with surpluses (e.g., some European nations) would face lighter impacts.
• Broader economic effects could include shifts in global supply chains, slower import growth, and possible job gains in U.S. manufacturing, but risks of higher costs and trade wars.

Main Stakeholders Affected

• U.S. Importers and Businesses: Face increased costs, particularly those sourcing from deficit countries, potentially squeezing profit margins.
• American Consumers: Likely to pay more for everyday imported products.
• U.S. Exporters: Could suffer if foreign countries retaliate with their own tariffs on U.S. goods.
• Foreign Governments and Exporters: Nations with trade deficits (e.g., major suppliers like China or the EU) would be most burdened, while surplus countries face milder effects.
• U.S. Congress and Executive Branch: Gains oversight through consultations, but the President retains some discretion in adjustments.

Notable Legal, Constitutional, or Political Implications

• Legal: The bill expands Congress's constitutional authority under Article I, Section 8 to regulate commerce and impose tariffs, but it may conflict with international agreements like World Trade Organization (WTO) rules, which discourage discriminatory tariffs based on trade balances without proving unfair practices. This could lead to WTO challenges or disputes.
• Constitutional: Reinforces congressional control over trade policy while allowing limited executive flexibility, aligning with separation of powers but potentially inviting court challenges if reductions are seen as overreach.
• Political: Signals a shift toward protectionist trade policies, appealing to domestic industries but risking bipartisan opposition due to potential economic disruptions and strained alliances. The consultation requirement ensures legislative input, reducing unilateral executive action.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Van Duyne, Beth [R-TX-24]

Recent Actions

• 2026-01-08: Referred to the House Committee on Ways and Means.
• 2026-01-08: Introduced in House
• 2026-01-08: Introduced in House

Bill Versions

• Fair Trade Act of 2026 — issued 2026-01-08 — PDF (2 pages)