Tag: Tariffs

The most important thing to know about the Trump administration’s defense of its hotly contested use of tariffs to bring allies and opponents to heel is not that it is a novel and unprecedented legal argument but rather a full-throated articulation of the campaign themes that got the president elected – in both 2016 and 2000.

In its legal documents, and in the oral arguments that took place before the Supreme Court Wednesday, the Trump administration paints a picture of America under siege.

Once thriving industrial towns in the Midwest hollowed out. Factories dismantled as supply chains have been moved offshore. Hostile foreign nations flooding the US with drugs and once productive workers turning to opioids and alcohol for solace as opportunities slip away.

If there is such a thing as a populist legal argument, the Trump administration is making it in Learning Resources, Inc. v. Trump. And as if to up the stakes, the administration is predicting an economic catastrophe if the court moves to curtail Trump’s ability to impose tariffs without congressional signoff.

“The President… has determined (tariffs) are necessary to rectify America’s country-killing trade deficits and to stem the flood of fentanyl and other lethal drugs across our borders,” the administration argues in court papers. “With tariffs, we are a rich nation; without tariffs, we are a poor nation.”

Indeed, the President has placed so much emphasis on the outcome of the case that he suggested for a short time that he might attend Wednesday’s hearing before backing off the idea.

What is most striking about Trump’s tariff regime, and his assumption that Congress grants the president broad authority to bypass a complex regulatory framework that has been in place largely undisturbed for decades is the underlying modus operandi.

Trump would likely never articulate it this way but his style in imposing tariffs is of a piece with much else he has undertaken – the shakeup of government agencies through DoGE, his unorthodox execution of foreign policy and his wholesale remaking of the Republican party. Move fast and break things, as they say in Silicon Valley.

Whether his claim that the president has unfettered authority to impose tariffs will win the day wasn’t entirely clear from the colloquy between the justices and US Solicitor General John Sauer who made the argument for the administration. Both conservative and liberal justices peppered Sauer with questions that focused on the administration’s assertion Congress had delegated tariff making authority to the president in times of national emergency.

They seemed skeptical that Congress had ceded that power, but later in the hearing conservatives Brett Kavanaugh and Amy Coney Barrett posed equally sharp questions of Neal Katyal, a former US solicitor general representing businesses suing to overturn the tariffs. Kavanaugh seemed concerned that blocking the president from unilaterally imposing tariffs on foreign made goods would conflict with the power granted the president under Article II of the Constitution to conduct foreign policy.

It would be logically inconsistent for the law to grant the president the power to impose trade embargoes, as it apparently does, while barring the president from imposing tariffs, Kavanaugh speculated.

Barrett appeared receptive to the administration’s argument that unwinding the president’s tariff regime would require the United States to refund hundreds of billions in projected proceeds. Such an outcome would create a “mess,” she said.

The court typically issues its opinions in June and July, at the end of its term. But it agreed to hear the tariffs case on an expedited basis and it is possible, perhaps even likely, that a decision will be issued sooner.

Through much of the nation’s history, Congress jealously guarded its power under Article 1 Section 8 of the Constitution to “collect taxes, duties, imposts and excises” but began to cede some of that authority to the president early in the 20th century. While that has enabled the president to impose new tariffs and raise and lower existing duties, the president’s authority has at the same time been constrained by a latticework of regulatory agency requirements and foreign treaties.

The issue before the court is whether the International Economic Emergency Powers Act, enacted in 1977, delegates tariff making authority to the president, permitting him to bypass existing controls. The law grants the president the power to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any… importation or exportation of… any property in which any foreign country or a national thereof has any interest.”

Presidents have typically used the law to impose financial sanctions on foreign governments and individuals, including asset seizures, but no president other than Trump has cited it as a basis for imposing tariffs. And nowhere in the text of the statute is the word tariff used.

At the hearing, liberal justices Sonia Sotomayor and Elena Kagan made much of this fact, but so too did conservative Neil Gorsuch, one of the court’s conservative majority. If the president could leverage his foreign policy authority into imposing tariffs, without congressional consent, there would be little for Congress to do in that arena.

“Could the President impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change,” Gorsuch asked.

Citing the fentanyl epidemic, Trump imposed steep tariffs on Canada, Mexico and China in January and February, blaming them for the flow of synthetic opioids into the US. In April, he imposed a second set of tariffs on all US trading partners, arguing that mounting U.S. trade deficits had created a national emergency while from time to time suspending some duties as US officials negotiated with their foreign counterparts.

At the outset, Trump’s imposition of sweeping tariffs triggered concerns that the higher cost of foreign made goods would trigger a new round of inflation.

But so far, the impact has been subdued. Importers, still apparently rolling in lush post pandemic profit margins, have been absorbing at least a portion of the difference. Meantime, Trump’s negotiated sale of soybeans and other agricultural goods to China may blunt the impact on agricultural imports and assuage American farmers. Moreover, the tariffs have had a huge impact on the US Treasury receipts. So far, the government has collected nearly $100 billion and estimates for a full year range as high as $750 billion if the tariffs remain in place.

But it isn’t just about revenue and economic clout. At bottom, the case centers on a fundamental theme of governance in the United States. Where does congressional authority end and where does the president’s begin and to what extent can the president’s foreign policy portfolio override the House and the Senate? It is a question that has animated American jurisprudence and politics from the beginning. Often there are powerful arguments on both sides and finding the right balance can be excruciatingly difficult.