The Supreme Court Makes a Prudent Ruling on the Trump Tariffs

B efore joining the president’s criticism of the Supreme Court’s tariff decision, Learning Resources v. Trump, conservatives would do well to remember the adage implicit in all of constitutional law: “What’s sauce for the goose is sauce for the gander.” Power asserted by a president of one political persuasion can — and almost certainly will — be used by presidents of the other political persuasion, for opposite ends. Power we might welcome for a president we trust will be wielded, one day, by a president we do not.

This is most assuredly true of the power asserted in the tariff case. For the first time in American history, President Trump asserted a unilateral presidential power to tax imports from any country at any level for any reason, for any period of time, at the mere say-so of the president — and the power to change course on a dime whenever he wishes: increasing, decreasing, or repealing those tariffs without notice, for any reason that occurs to him. President Trump levied tariffs on goods from countries like New Zealand, with whom we have friendly relations and a trade surplus. He levied higher tariffs on Canada than on China, and he jacked them up when Ontario had the temerity to run an ad with a clip of President Reagan explaining the benefits of free trade. He imposed a crippling 50 percent tariff on goods from Brazil because he did not approve of their prosecution of their former president, and 10 percent additional tariffs, rising to 25 percent in June, on goods from eight European allies that opposed the prospect of our (illegal) takeover of Greenland.

All this is based on a 50-year-old statute that does not even mention tariffs or other taxing powers, and that had never before been used for that purpose.

Think of what a future President Gavin Newsom or Alexandria Ocasio-Cortez could do with this power. Not only could they fund spending extravaganzas of gargantuan proportions without having to go to Congress, but they could increase taxes on products that progressives do not like. Who doubts that a Democratic president would impose crippling tariffs on fossil-fuel-related imports, including machinery and other materials necessary to produce fossil fuels in the United States? The conservatives now lamenting Trump’s tariff defeat would not be happy with that.

Most importantly, the Court’s legal reasoning was solid. Don’t let the 170 pages of opinions fool you. The reasoning of Chief Justice John Roberts’s opinion, for a six-justice majority, was short, sweet, and sensible. The lengthy concurring and dissenting opinions consisted mostly of erudite inside baseball.

The Roberts opinion begins with a principle that no one openly disputes: that the president’s power to impose taxes or regulation on Americans can stem only from the Constitution itself or from statutes passed by Congress. The power to impose tariffs (“Taxes, Duties, Imposts, and Excises”) is the very first federal power listed in Article I of the Constitution, and it is vested in Congress, not the president. For a country that had just fought a revolutionary war over the claim that taxation is impermissible unless authorized by the People’s elected representatives, this was no surprise. That means the president cannot levy tariffs unless Congress delegated that power to him.

In the case of the Trump tariffs, it did not. The only statute invoked by the administration, 1977’s International Economic Emergency Powers Act (IEEPA), contains extensive and detailed powers, but none of them involve tariffs or taxes. The power ostensibly invoked by the administration is the power to “regulate . . . importation.” Tariffs are commonly used as a means of regulating imports. But as the Court’s opinion makes clear, the converse is not true: The power to “regulate” is not commonly used to impart the power to impose tariffs, or other taxes. The statute books contain hundreds of laws empowering the executive to “regulate” a whole host of activities, but the administration’s lawyers were unable to point to a single instance where Congress used the word “regulate” to delegate taxing power.

Moreover, every statute in which Congress has delegated tariff authority to the executive has done so in explicit language, and with limitations as to purpose, amount, and duration. Never has Congress even considered delegating the unbounded authority President Trump purported to find in IEEPA.

True, on one occasion President Richard Nixon invoked a predecessor statute, the Trading with the Enemy Act of 1917, which includes the same language, to impose very limited tariffs for a brief period of time. But the legislative history of IEEPA treats that instance as an example of executive overreach. Congress repealed the relevant portion of that statute and passed a new statute, the Trade Act of 1974, under which Congress permits the president to negotiate trade agreements only subject to “fast-track authority” explicitly granted by Congress in advance. In another section, it allows the president to raise tariffs only with a cap of 15 percent and a duration of 150 days. It defies belief to think that the post-Nixon Congress expanded the very presidential authority that had just been abused, and that it did so without using any language referring to tariffs or without imposing any of the limits it always imposes on tariff authority.

Critics offer two main counterarguments. First, they say that tariffs are a foreign-policy matter, where the president has significant independent authority. But many domestic issues have foreign-policy implications. Climate change was the subject of an international treaty, after all! The Framers were well aware of the foreign-policy significance of trade policy but still gave the tariff power only to Congress.

Second, they point out that IEEPA grants the president authority to prohibit imports altogether, and they ask why this should not include the lesser power of taxing them. But as the Court says, tariffs “are different in kind, not degree, from the other powers in IEEPA.” Embargoes are emergency measures, targeted specifically at hostile foreign adversaries in times of international conflict. Tariffs are taxes on American companies, based on trade with (mostly) friendly countries. Apples and oranges.

Since the days of Adam Smith and David Ricardo, economists have regarded tariffs as a particularly pernicious form of taxation, injuring consumers and producers alike. But the evil of tariffs at presidential whim goes beyond that. When Congress enacts tariff laws, American businesses know where they stand. They are able to invest and to make contracts knowing what the prices will be. If one person is able to impose tariffs one day, double them the next, and revoke them the next, for any reason or no reason at all, American businesses are unable to invest capital, make contracts for future purchases, or employ workers. Quite apart from the depressant effect of higher taxes, the unpredictability of tariff policy retards economic growth, reduces employment, and raises costs for consumers.

This was well known to the Framers. In Federalist No. 62, Madison asked:

What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not but that his plans may be rendered unlawful before they can be executed? What farmer or manufacturer will lay himself out for the encouragement given to any particular cultivation or establishment, when he can have no assurance that his preparatory labors and advances will not render him a victim to an inconstant government?

The Framers’ solution was to place this power in the hands of Congress.

Congress has explicitly given the president specific powers to respond to specific trade threats — national security issues, unfair competition, dumping, and currency depreciation — but not blunderbuss worldwide tariffs, changeable at will. The Supreme Court was right to leave the taxing power where the Framers put it: in the legislative branch.