Where the trade court's tariff decision went wrong

Mint

2 days ago

President Donald Trump announces tariffs in the Rose Garden at the White House in Washington, April 2.
During a national crisis, an advocate of tariffs testified before Congress that 'reciprocal trade agreements" push foreign nations to stop erecting 'excessive economic barriers to trade."
Who said this? President Trump? Sen. Reed Smoot or Rep. Willis Hawley? It was President Franklin D. Roosevelt's secretary of state, Cordell Hull, explaining in 1940 how reciprocal tariffs could reverse unfair trade practices targeting the U.S.
Mr. Trump's policy of using reciprocal tariffs to advance U.S. interests isn't a new or radical idea, and it's a necessary one. The U.S. Court of International Trade was wrong to rule on Wednesday that the administration had exceeded its authority in imposing these tariffs.
The ruling overlooked history, statute, precedent and national interest. It was a misreading of the International Emergency Economic Powers Act, or IEEPA, and a misinterpretation of America's bipartisan tradition of using trade policy to defend national economic resilience.
On Thursday, the U.S. Court of Appeals for the Federal Circuit stayed the trade court's ruling while it considers an appeal. In a separate case, a district judge in Washington issued an injunction against the tariffs, although he stayed his own order. The issue requires resolution only the Supreme Court can deliver.
Americans should hope the justices side with Mr. Trump. In its May 28 decision, V.O.S. Selections v. U.S., the trade court held that IEEPA doesn't authorize the president to impose 'unbounded" tariffs. The opinion misses the mark on legal and historical fronts. It substitutes policy skepticism for statutory interpretation, undermining legitimate executive authority during declared national emergencies.
The trade court's reading of IEEPA contradicts the statute's text and history. IEEPA's independent emergency authority allows the president to regulate, prevent or prohibit the importation of property in which foreign countries or nationals have an interest. The language mirrors that of the earlier Trading with the Enemy Act, which President Richard Nixon used to impose a universal 10% tariff in 1971. The courts upheld Nixon's use of that power in U.S. v. Yoshida International (1975), concluding that tariffs were a sensible approach to regulating imports during a declared emergency. Congress enacted IEEPA in 1977 with language directly drawn from the Trading with the Enemy Act.
The trade court's description of the tariffs as 'unbounded" also contradicts Mr. Trump's painstakingly specific April 2 executive order, which imposes precise duties, product exemptions and country-specific rates. I should know: I helped coordinate their implementation.
Further, the court errs in implicitly inviting itself to review the sufficiency of the president's emergency declaration. IEEPA requires only that the president declare a national emergency 'to deal with an unusual and extraordinary threat" arising outside the U.S., which is exactly what the executive order does.
Trade deficits can qualify as emergencies. In the Trade Act of 1974, Congress recognized that 'large and serious" balance-of-payments deficits could justify swift presidential action, including tariffs and quotas. This act's unique procedures didn't preclude similar IEEPA authorities addressing identical threats.
Second-guessing presidential responses to emergencies defies precedent. In Dames & Moore v. Regan (1981), the Supreme Court acknowledged the validity of President Jimmy Carter's hostage crisis response, intact to this day, which froze Iranian property in the U.S. Courts have long held that the political branches—not judges—determine how to deal with foreign economic threats that rise to emergency levels.
Further, in Field v. Clark (1892), the justices held that 'it is often desirable, if not essential . . . to invest the President with large discretion in matters arising out of the execution of statutes relating to trade and commerce with other nations."
While IEEPA gives the president significant latitude, Congress can terminate a national emergency by joint resolution. That Congress hasn't thwarted Mr. Trump's tariffs counsels restraint in questioning his decision.
The trade court evidently yearns to restore misguided economic orthodoxy. But frictionless global trade remains a mirage. Even John Maynard Keynes, hardly an economic nationalist, cautioned against the utopian allure of borderless commerce: 'Let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national."
The pursuit of a perfectly undistorted global market ignores American history and legal tradition. Hull's reciprocal-tariff program of the 1930s—the foundation of U.S. multilateral trade—was premised on the imposition of duties on imports from countries that refused to lower theirs. Hull understood that economic resets require leverage.
The test of judicial reasoning is whether it honors the text, structure and history of the law it interprets. The Court of International Trade fell short of that test.
Mr. Bogden is a fellow at the Steamboat Institute and a former clerk for the U.S. Court of International Trade.