Now that we know tariffs have had an enormously positive impact on U.S. foreign policy, not to mention chipping away at our national deficit, a federal appellate court has ruled that almost all of President Donald Trump’s tariffs are unconstitutional.
The question isn’t whether tariffs are an effective policy, though that is essentially what the administration argued in court. The majority even said the same thing: “We are not addressing whether the President’s actions should have been taken as a matter of policy.”
The question is whether Congress transferred sufficient authority to the president for such actions. Notably, it was not a unanimous decision by the lower court, nor did it break along party lines. The court upheld a May decision by the Court of International Trade. Moreover, the tariffs remain in place until October 14 pending appeal to the Supreme Court.
According to The Wall Street Journal, “The 7-4 ruling from the U.S. Court of Appeals for the Federal Circuit upheld a lower-court decision that undercuts a core tenet of President Trump’s economic agenda. The majority found the president overstepped his authority under a 1977 law known as the International Emergency Economic Powers Act, [IEEPA].”
The tariffs at stake are his “Liberation Day” levies against nearly every trading partner. Rates have been modified, in some cases numerous times, as Trump works to negotiate deals with various nations.
Naturally, Trump took to Truth Social to voice his displeasure with the ruling and to make the case for what he’s doing with tariffs:
ALL TARIFFS ARE STILL IN EFFECT! Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong. The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. If allowed to stand, this Decision would literally destroy the United States of America. At the start of this Labor Day weekend, we should all remember that TARIFFS are the best tool to help our Workers, and support Companies that produce great MADE IN AMERICA products. For many years, Tariffs were allowed to be used against us by our uncaring and unwise Politicians. Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again! Thank you for your attention to this matter.
His typical hyperbole aside, as I’ve said before, we were in (read: losing) a trade war long before Trump’s tariffs. The president is absolutely right about the problem of unfair trade practices by other nations, and he’s right to prioritize American interests, which nearly every president (with the exception of Ronald Reagan) has failed to do over the last 50 years.
If Trump’s efforts are undone, we could face “catastrophic consequences,” his attorneys told the court. “Our country would not be able to pay back the trillions of dollars that other countries have already committed to pay, which could lead to financial ruin,” they wrote. “The President believes that a forced dissolution of the agreements could lead to a 1929-style result.”
The president’s authority to impose sweeping tariffs and then arbitrarily delay, recalculate, remove, or reimpose them is not without bounds, so it’s unsurprising to see multiple courts balk. The president’s claim of a national emergency under the IEEPA is dubious. More importantly, the court’s majority noted, “IEEPA does not use the words ‘tariffs’ or ‘duties,’ nor any similar terms like ‘customs,’ ‘taxes,’ or ‘imposts.’”
That said, Trump isn’t out of options, even if he loses at the Supreme Court. The 1974 U.S. Trade Act provides for the administration to launch Section 301 investigations as the basis for tariffs, or he could use the Trade Expansion Act of 1962, which he is already exercising for tariffs on steel and aluminum. Furthermore, the Trade Act of 1930 gives the president authority to impose 50% tariffs.
In other words, Congress has tried for a century to delegate its Article I authority to “lay and collect Taxes, Duties, Imposts and Excises.” The court, too, noted that the aforementioned laws “used clear and precise terms to delegate tariff power, reciting the term ‘duties’ or one of its synonyms.”
Ironically, Trump’s claims of the enormous impact of his tariffs — as he later put it on social media, “the TRILLIONS OF DOLLARS we have already taken in” — worked against him. The Supreme Court’s major questions doctrine establishes that Congress must clearly delegate authority for significant economic actions. Joe Biden’s transfer of student debt to taxpayers failed under this standard, and that was a roughly $400 billion hit to taxpayers. Trump’s tariffs clobber companies and consumers with taxes on $4 trillion in imports every year.
The tradeoff (pardon the pun) may be worth it, but the president has an uphill battle to defend his chosen method.
