Trump’s Capricious Tariff Tantrums are Chaotic. But They’re Also Illegal (Probably)

Tariffs on, tariffs off, tariffs raised, tariffs suspended, tariffs threatened! It’s so hard to keep track. And hard to remember in accounts of Donald’s Trump’s Godfather trade practices the fact that they’re probably illegal.

It turns out Trump’s bizarre barrage of tariffs imposed on products from friend, foe, and countries whose names most Americans may not recognize aren’t just dumb — as most economists would somewhat more decorously tell you — they’re also illegal. Maybe. Two federal courts, the Court of International Trade and the United States District Court for the District of Columbia, have ruled that they are illegal. Both have issued injunctions ordering the Trump administration to lift them.

But then the Court of Appeals for the Federal Circuit has temporarily stayed those judgments “while the court considers the motion papers.” How long will that take? (No one knows.) Moreover, the court’s decision will certainly be appealed to the Supreme Court.    How long will that take? The Court has denied a motion for expedited review.

All this means that the uncertainty about tariffs will continue indefinitely. The whole episode is a farce. The New York Times has reported that even now, close to 400,000  manufacturing jobs are currently unfilled.

Trump has imposed the tariffs under an executive order that responds, or pretends to respond, to one of his bogus emergencies. Well, no, it doesn’t fit most people’s idea of (or most dictionaries’ definitions of) an emergency.  Much less a negative trade balance that has existed for this entire century, and indeed ever since the deep U.S. recession of the early 1980s.

A 1974 law does give the President authority to impose some tariffs to deal with balance-of-payments issues, the Trade Court observed, but those tariffs are limited to 15% and 150 days.  Besides, “even ‘large and serious United States balance-of-payments deficits’ do not necessitate the use of emergency powers.”  (Nor, presumably, does a desire to get back at Brazil because that nation will prosecute Trump’s former fellow-populist/autocrat, Brazil’s ex-president Jair Bolsonaro, who has been accused of fomenting an insurrection just a year after and somewhat similar to the Trump-inspired January 6 assault on the U.S. Capitol.)

Article I of the Constitution where the legislative, not the executive, branch gets top billing, gives Congress the power to “lay and collect Taxes, Duties, Imposts and Excises [which include tariffs]” and to “regulate Commerce with foreign Nations.”  Congress can delegate some of this power to the executive.  Congress did so in the International Emergency Economic Powers Act (IEEPA) of 1977. (Ironically, this act was meant to curb the power that President Richard Nixon had recently claimed.)

The question is whether or not the IEEPA gives a President the authority to do what Trump has done.  The answer, two courts have said, is “no.”

The three-member Trade Court’s ruling was unanimous.  The judges found that “[b]ecause of the Constitution’s express allocation of the tariff power to Congress, we do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers. Two are relevant here. First, [the] delegation of a power to “regulate . . . importation,” read in light of its legislative history and Congress’s enactment of more narrow, non-emergency legislation, at the very least does not authorize the President to impose unbounded tariffs.”

Second, the Trade Court said, “IEEPA’s limited authorities may be exercised only to ‘deal with an unusual and extraordinary threat with respect to which a national emergency has been declared . . . and may not be exercised for any other purpose.’” As the Trafficking Tariffs do not meet that condition, they fall outside the scope” of the statute.

More broadly, “Plaintiffs in both cases argue that the words “regulate . . . importation” do not confer the power to impose tariffs,” the court declared. “Plaintiffs are correct in the narrow sense that the imprecise term ‘regulate . . . importation,’ under any construction that would comport with the separation-of-powers underpinnings of the nondelegation and major questions doctrines, does not authorize anything as unbounded as [Trump’s] Worldwide and Retaliatory Tariffs.”

After the Trade Court issued its injunction but before the appeals court stayed it, Politico  observed that the Trade Court’s unanimous ruling against Trump’s signature tariffs is not the first judicial rebuke of Trump’s second-term administration. Nor will it be the last. But it may be the most serious and consequential to date. For the time being, the decision provides a major source of relief to the large majority of Americans who opposed Trump’s tariffs; to the U.S. businesses, both large and small, whose operations were existentially threatened by a policy that changed by the day; to the country’s foreign trading partners, whose economies were thrown into disarray; and to international financial markets.”

Whether or not Trump’s tariff policy makes sense has never been the issue.  “This case is not about tariffs qua tariffs.” United States District Judge Rudolph Contreras wrote, “It is about whether IEEPA enables the President to unilaterally impose, revoke, pause, reinstate, and adjust tariffs to reorder the global economy. The Court agrees with Plaintiffs that it does not.” In fact, “IEEPA is not a law providing for tariffs.”

“The only activity” mentioned in IEEPA “that could plausibly encompass the power to levy tariffs is that to ‘regulate . . . importation,’” he wrote.  However, “the Court agrees with Plaintiffs that the power to regulate is not the power to tax.”

Most people with any sense of economic history find unsettling echoes of the infamous 1930 Smoot-Hawley Tariff that sparked an international trade war and probably deepened the Great Depression. But Smoot-Hawley isn’t just a reminder of how wrong screw-you tariffs can go.  It’s also a reminder that Congress doesn’t have to be pandering to the whims of a would-be autocrat in order to screw things up.

The President who signed Smoot-Hawley (over the objections of 1001 American economists who urged him not to), Herbert Hoover wasn’t engaged in any power grabs.  He just didn’t veto the tariff bill. The issue was well debated in Congress and in the nation at large. There was no doubt it was legal and Constitutional.  You don’t need a Donald Trump to create this kind of chaos. Smoot-Hawley shows that Congress can do it, too.

But the Constitution gives Congress has the authority to do so.

It doesn’t give that authority to Trump