The Supreme Court is hearing a pivotal case on Trump tariffs (Photo: Joe Ravi) This image is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.
President Trump signed five executive orders that imposed tariffs of indefinite duration on nearly all goods imported into the United States from almost every country.
Trump self-declared a national emergency so he could regulate the importation of goods and impose tariffs without congressional oversight. His authority for doing this was a law passed by Congress called the “International Emergency Economic Powers Act” (IEEPA).
First, he declared an emergency at the Mexican/United States border implicating cartels and drugs. He then added Canada and China, claiming that they helped to transmit illicit drugs into the United States.
He called these threats unusual and extraordinary, and he claimed the tariffs he imposed in response to be authorized by IEEPA.
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On April 2, he imposed “reciprocal tariffs” on nearly every country, including one, an island, inhabited only by penguins. He again claimed his tariffs were authorized by IEEPA.
He offered as an explanation that his reciprocal tariffs addressed “an unusual and extraordinary threat to the national security and economy of the United States.”
In April, five small businesses challenged Trump’s authority, suing him in the Court of International Trade. Oregon and 11 other states joined the suit against the government. This is the case before the Supreme Court.
Some background is helpful.
The Constitution grants Congress the power to ‘’lay and collect taxes, duties, imports, and excises“ and to ‘’regulate commerce with foreign nations.” Tariffs are a tax, and the exclusive authority to tax lies within the legislative branch of government. That is Congress.
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This power to tax was given only to Congress out of fear that a future president exercising a taxing power may consider himself to be, and act like, a king.
In the late 1700s tariffs were the government’s primary source of revenue. It wasn’t until 1913 when the 16th amendment was ratified that Congress was given the power to tax income from whatever source derived. This language remains in our tax code today.
In the late 19th and early 20th centuries, Congress began to delegate to the executive limited authority to activate or suspend tariff rates through international agreements. But Congress decided what the tariff rates would be.
Subsequent legislatures allowed the president to increase some tariffs, but not beyond a rate set by Congress. In other words, Congress still retained power of this taxing authority and when delegated, the language of the laws was sharp and clear.
IEEPA provides that after a president declares a national emergency under the National Emergency Act he may “investigate, block during the investigation, regulate, direct and compel, notify, void or prevent… the importation or exportation… of property.”
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IEEPA was born of the National Emergency Act and was intended to limit a president‘s power to times of war or national emergencies.
Although Trump’s actions have raised numerous questions, the one before the appellate court, and now the Supreme Court, is whether these five challenged executive orders, declaring national emergencies and imposing sweeping tariffs, are authorized, that is, legal under IEEPA.
The appellate court held they were not.
To resolve this question, the Supreme Court first looked at the text of IEEPA. What does the text say, what does the text mean? Justice Amy Coney Barrett is a keen texturalist.
Will the court find that the power to “regulate “as used in the text include includes the power to tax? Likely it will not, although Justice Samuel Alito has indicated he’s OK with that interpretation.
In drafting IEEPA, Congress avoided the use of the word “tax” or “tariff.” The government was unable to identify any other law save one that used the word regulate, but meant the authority to tax.
Fuzzy language when it comes to the authority to delegate taxation is a very bad thing. (And interestingly, the government‘s most senior lawyer, the solicitor general, contrary to the president’s numerous assertions agreed that these tariffs are a tax borne by American taxpayers and American companies.)
All prior laws that delegated the authority to impose tariffs beyond Congress doing so — for example to the president — did so explicitly. There was no question about their language or the authority they granted.
The Supreme Court adheres to what is called the “major questions doctrine“ and the government‘s position runs a foul of it.
The government claims there is no limit on the amount of tariffs a president can impose, and indeed this president brags daily about the trillions of dollars that his tariffs are raising for the treasury.
This doctrine would require such a weighty delegation of exclusive authority to be specifically set forth in a law. It is not. Otherwise, it is not reasonable to conclude the Congress intended to delegate to a president it’s exclusive authority to tax.
Questioning by the justices at yesterday‘s hearing was interesting and mostly inconclusive. Count on the three liberal justices to find that Trump was without authority.
Justice Neil Gorsuch was challenged by the idea that Trump has taken without any limitation Congress‘s power to impose taxes. He may join the three liberals, as may Barrett.
That leaves Chief Justice John Roberts and Brett Cavanaugh, because Alito and Clarence Thomas will probably support Trump.
Roberts called the tariffs a “clear tax.” That may mean he thinks Trump‘s actions in imposing these tariffs were outside of his authority as president. Only one more conservative justice is needed to tip the case against the government.
And, interesting also is the fact that Thomas claims to be an originalist. That is, he interprets the Constitution as the man in the street in 1791 would have understood it. I don’t know how he’s going to find that Congress had, yet somehow lost, its exclusive power to tax.
Issues were raised regarding the need to repay the tariffs should the court strike down Trump‘s authority, but I don’t think the court was moved by these arguments.
Striking down his authority would be the right holding; otherwise a president can seize the power to tax whether in foreign commerce or internal commerce. Or impose income or proprty taxes.
In the beginning, imposing taxes was the job given to Congress by the founders and in the end it must remain Congress’ job.
Finally holding against the government is a finding that the legislative branch is real. And that it holds the power of checks and balances against the executive branch. One would think congress would like that.
If Trump is found not to have authority under IEEPA, he does have alternative approaches to use to impose tariffs. But they involved oversight and are much more cumbersome than his ability to build this power without any congressional oversight under IEEPA.