A Correct Decision

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The U.S. Court of International Trade ruled that President Trump had exceeded his authority under the International Emergency Economic Powers Act, a 1977 law, to impose tariffs on other nations. The decision was unanimous. One of the judges had been appointed by Donald Trump in his first term. Another is a Reagan appointee.

The power to raise taxes resides with Congress under Article 1 of the Constitution. Congress passed the International Emergency Economic Powers Act to deal with limited situations and countries, giving the President the power to impose limited tariffs in emergencies. Neither the text of the law nor the intent of the law ever contemplated giving the President unilateral power to raise or lower tariffs broadly.

If you’re a regular reader or listener, you know I predicted back on “Liberation Day” that this was the likely outcome.

It is also the best outcome. “The Worldwide and Retaliatory Tariffs lack any identifiable limits and thus fall outside the scope of [the International Emergency Economic Powers Act],” the Court wrote, noting the legislation requires limits on tariffs

Ironically, the trade court relied on a case from the seventies that upheld tariffs imposed by President Nixon. In that case, the court noted, “President Nixon ‘imposed a limited surcharge, as a temporary measure calculated to help meet a particular national emergency, which is quite different from imposing whatever tariff rates he deems desirable.’”

The court, citing the same Nixon era case, reiterated, that “a finding that the President has the power … to impose whatever tariff rates he deems desirable simply by declaring a national emergency would not only render our trade agreements program nugatory, it would subvert the manifest Congressional intent to maintain control over its Constitutional powers to levy tariffs.”

We should not want a President to have the power to impose, at will, tariffs on every nation on his whim. The President is not a dictator. We have a separation of powers. The founders gave Congress the power to raise taxes. Article 1, Section 8 of the Constitution outlines the limited powers of the federal Congress. The very first clause states, “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” A tariff is a duty and that power resides with Congress.

Had the President done as I and others suggested and used the tariffs to target China, he’d have probably won the case. But starting a global trade war with both our rivals and allies was a stupid move.

The decision is, however, limited. The President does have broad powers delegated by Congress to impose tariffs on categories of goods. Steel, aluminum, pharmaceuticals, and tariffs on other categories of goods can remain based on other laws. But the reciprocal tariffs that broadly impact every country now have a ten-day wind-down.

The Trump Administration is going to appeal, of course.

Trump supporters will, of course, scream that this is judicial overreach and activists judges. A Reagan and a Trump appointed judge are not exactly candidates for judicial activism. They are not, contrary to some, trying to subvert a position that is political. The President attempted to use a law of Congress that delegated limited tariff powers to the President. The courts do play a role in interpreting the limits.

Unfortunately, President Trump, unrestrained by the idea of another election, has decided to operate with the economic policies of Bernie Sanders and the left. Barack Obama and the Democrats picked winners and losers. Many of the same people who then blasted Obama over Solyndra are now cheering on President Trump for threatening Apple with tariffs if they do not do his bidding. While the right has embraced post-modernism like the left, the law and the separation powers still matter.

Raising taxes on Americans is a matter for the Congress. The federal court is right in this instance. The activist was not the court, but the President. Contrary to the claims of hysterics on the left and right, the system continues to work with checks and balances.

Lastly, I have to tip my hat to my friend Casey Mattox, for making this point:

“The conservative and libertarian legal movement has both celebrated positive things the Trump administration has done and also directly opposed him - successfully - when he has exceeded his constitutional authority. The same was not true of the left during the Biden Admin.”