For the second time, Donald Trump’s worldwide 10 percent tariff and retaliatory “liberation day” tariffs have been found illegal by the courts. Trump has lost a lot of lower-court cases in the past eight months, and the district courts in particular have been wrong as often as they’ve been right. But in this case, the scholarly opinions of the full, en banc Federal Circuit (which voted 7–4 against the tariffs on bipartisan lines) are well reasoned.
The case should, and likely will, be finally resolved by the Supreme Court. In the interim, if the president believes that he needs more leverage to negotiate trade deals going forward, he should ask Congress for it — as he should have done in the first place. And Congress should be more careful about giving away powers that were supposed to belong to the national legislature.
The constitutional principles are straightforward. Congress has explicit power over taxes: the power to “lay and collect Taxes” is the very first enumerated power of Congress mentioned in Article I, Section 8. The Tariff Act of 1789 was the first act of the First Congress. By contrast, taxes, tariffs, and trade are never mentioned among the president’s powers. For most of American history, Congress set tariff rates in detail, and presidents did not claim any such authority. Thus any power Trump possesses to impose or alter tariffs must come from some delegation of that power by Congress. As the majority noted, while national security concerns may give presidents some inherent, unwritten authority to interdict or inspect trade, “absent a valid delegation by Congress, the President has no authority to impose taxes.”
Trump has invoked “emergency” powers under the International Emergency Economic Powers Act of 1977 (IEEPA). The likely reason why he reached for IEEPA rather than one of several other statutes delegating some tariff powers to the executive is that those other statutes carefully limit the powers they grant to the president; IEEPA, which aims to deal with emergencies, does not. But the Federal Circuit concluded that this is further proof that presidential authority under IEEPA to “investigate” and “regulate” foreign transactions does not include a power to impose tariffs:
Notably, when drafting IEEPA, Congress did not use the term “tariff” or any of its synonyms, like “duty” or “tax.” There are numerous statutes that do delegate to the President the power to impose tariffs; in each of these statutes that we have identified, Congress has used clear and precise terms to delegate tariff power, reciting the term “duties” or one of its synonyms. . . . The absence of any such tariff language in IEEPA contrasts with statutes where Congress has affirmatively granted such power and included clear limits on that power. . . .
In each statute delegating tariff power to the President, Congress has provided specific substantive limitations and procedural guidelines to be followed in imposing any such tariffs. It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs.
This is how many regulatory powers work: executive agencies can regulate Wall Street, seat belts, and ladder heights but can’t unilaterally impose business taxes. That conclusion is buttressed by the fact that IEEPA was enacted in 1977, at the height of post-Watergate efforts to rein in presidential powers, in response to an across-the-board temporary tariff imposed by Richard Nixon in 1971. Presidents have often invoked IEEPA since 1977, but none until now has claimed that it contains authority to impose tariffs.
By contrast, the delegation of tariff power to the executive that was originally (and dubiously) upheld by the Supreme Court in J. W. Hampton, Jr. & Co. v. United States (1928) explicitly gave the president powers over “increases or decreases in any rate of duty.” As the appeals court noted, under today’s “major questions doctrine,” courts should not assume that large powers are delegated implicitly through vague, general language. That doctrine was frequently and rightly cited against Joe Biden’s efforts to govern without Congress; it is just as applicable here. As the majority noted, “tariffs are a core Congressional power,” and Trump’s “interpretation of IEEPA would be a functionally limitless delegation of Congressional taxation authority.”
There are further hurdles for the administration’s position. Four members of the Federal Circuit majority argued that if IEEPA did delegate unlimited authority over tariffs, it would be unconstitutional. The Court of International Trade, whose decision was reviewed here on appeal, ruled that the worldwide and retaliatory tariffs “lack any identifiable limits” and are “unbounded . . . by any limitation in duration or scope” and thus did not fit IEEPA’s statutory definition of an emergency action. (There may be a better argument on that score for Trump’s fentanyl-crisis tariffs on China, Mexico, and Canada, but only if IEEPA authorizes tariffs in the first place.)
There are sound reasons why the Framers kept the taxing power in the legislature. English and colonial history provided long examples of how and why the power of the purse was jealously guarded by Parliament and state legislatures, and why “no taxation without representation” was such a potent protest slogan against taxes and duties on tea and other goods. Tariffs, like other business taxes, should be predictable in order to allow businesses to plan ahead, and this is an especially important consideration for foreign supply and delivery chains that require negotiations with foreign partners and long voyages at sea. Also, like other business taxes, high tariffs are always a honeypot for corruption and special pleading by businesses seeking exemptions; concentrating such lobbying on the ongoing, ever-shifting discretion of the executive exacerbates the problem. At least in Congress, every special interest must be balanced with hundreds of others.
The Federal Circuit gave Trump until mid-October to comply with its ruling, and it is likely that the Supreme Court will give him more time than that. The Court has been properly deferential to the executive’s practical interests in repeated collisions with lower courts. But in the end, it is properly the role of the Court to say what the law is. These tariffs are not authorized by the Constitution or by Congress, and they must go.