Trade Act of 1974: What It is, How It Works, Example

What Is Trade Act of 1974?

The Trade Act of 1974 is a piece of legislation passed by the U.S. Congress to expand American participation in international trade and reduce trade disputes. The enactment of the law happened on Jan. 3, 1975. The act provided the authority to reduce or eliminate trade barriers and to improve relationships with non-market Communist countries and countries with developing economies. Further, the act hoped to bring change to injurious and unfair competition laws.

Key Takeaways

• The Trade Act of 1974 is legislation passed by Congress to expand U.S. participation in international trade and reduce trade disputes.
• The act gave relief to American industries negatively affected by increased international trade, and placed tariffs on imports from developing countries.
• It has opened up foreign markets to U.S. exports.
• It created a fast-track authority for the president to negotiate trade agreements, which Congress may approve or disapprove but cannot amend or filibuster.

Understanding the Trade Act of 1974

The act provided relief for American industries negatively affected by increased international trade and placed tariffs on imports from developing countries. It also provided for U.S. action against foreign countries whose import activities unfairly disadvantaged American labor and industry.

In retrospect, the Trade Act of 1974 and its subsequent iterations have been used more to open foreign markets to U.S. exports and investments than to protect American industries from unfair outside competition.

International trade has long been a contentious political and economic issue. Opponents argue it takes jobs away from domestic workers. Proponents counter that, while international trade may force domestic workers to move into other lines of work, free trade takes full advantage of specialization and division of labor to improve economic conditions in all participating countries.

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