A Victory for Separation of Powers
Wednesday's unanimous ruling against President Donald Trump's expansive 'Liberation Day' tariffs by the United States Court of International Trade wasn't merely a victory for the businesses and consumers opposed to the policy. The decision was much more than that: a victory for the constitutional system of separation of powers—and, even more broadly, for the rule of law in America.
The decision came in a case filed by the Liberty Justice Center and me on behalf of five American businesses harmed by the tariffs, and it also covers a similar case filed by 12 states led by Oregon. Our suit challenged Trump's attempted use of the International Emergency Economic Powers Act of 1977 to impose 10 percent Liberation Day tariffs on imports from almost every nation in the world, plus additional 'reciprocal' tariffs on many more countries. We argue that the IEEPA doesn't grant Trump the virtually unlimited tariff authority he claims, and that, if it did, it would be unconstitutional. Earlier, the president also used IEEPA to impose 25 percent tariffs on Canada and Mexico, plus additional tariffs on China, under the pretext that they would somehow curtail importation of fentanyl into the United States. (Our case challenged only the Liberation Day tariffs, while the Oregon case also targeted the fentanyl ones.) In combination, the IEEPA tariffs kicked off the biggest trade war since the Great Depression. The Tax Foundation estimated that Trump's IEEPA tariffs would have imposed some $1.4 trillion to $2.2 trillion in tax increases on Americans over the next decade. They also would have severely slowed economic growth, inflicted grave harm on many businesses—including our clients, who depend on imports—and raised prices on consumers.
Fortunately, the court ruled that Trump does not have the 'unbounded authority' he claims 'to impose unlimited tariffs on goods from nearly every country.' The British overthrew King Charles I in part because he tried to impose 'ship money' taxes without legislative authorization. The president of the United States is no king, and he does not have the power to impose taxes in the form of tariffs whenever he feels like it. The court's decision upholds this fundamental principle of the Anglo-American constitutional tradition.
The IEEPA doesn't even mention tariffs as one of the emergency powers it grants the president. No previous president ever used it to impose them. In addition, the law can be invoked only to address a 'national emergency' that amounts to an 'unusual and extraordinary threat' to America's economy or national security. The administration claimed that the president has unlimited discretion to decide what qualifies as an 'emergency' and an 'unusual and extraordinary threat.' Thus, the Liberation Day tariffs were supposedly justified by the existence of trade deficits with various countries, even though such deficits have persisted for decades; there is nothing 'unusual' about them; and, as most economists recognize, they are not a threat at all. As Judge Jane A. Restani put it during oral argument, the administration's approach would allow the president to impose sweeping tariffs for virtually any 'crazy' reason, such as a peanut-butter shortage.
The court ruled that the 'IEEPA requires more than just the fact of a presidential finding or declaration,' because 'it does not grant IEEPA authority to the President simply when he 'finds' or 'determines' that an unusual and extraordinary threat exists.' Otherwise, he would have virtually unlimited tariff authority, which the Congress that enacted the IEEPA carefully sought to prevent.
The court also emphasized that 'the Constitution assigns Congress the exclusive powers to lay and collect Taxes, Duties, Imposts and Excises' and to 'regulate Commerce with foreign Nations.' For that reason, 'any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.' It would 'constitute an improper abdication of legislative power to another branch of government.' The Supreme Court has been relatively lax in enforcing what is called the 'nondelegation doctrine,' which limits the extent to which congressional authority can be delegated to the executive. But both conservative and liberal justices have held that there must be at least some limits to delegation. And if anything qualifies as excessive delegation, it would be a transfer of unlimited power to impose tariffs amounting to trillions of dollars in tax increases.
The court ruling also cites the 'major-questions doctrine,' which requires Congress to 'speak clearly' when authorizing the executive to make 'decisions of vast economic and political significance.' According to the major-questions doctrine, if the law isn't clear, courts must reject the executive's assertions of power. If Trump's sweeping use of the IEEPA is not a major question, nothing is. The magnitude of the IEEPA tariffs exceeds that of any of the measures ruled to be 'major questions' by the Supreme Court. Not even President Joe Biden's $400 billion student-loan-forgiveness plan (which the Court in my view rightly invalidated under the doctrine) compares. And, as the Court of International Trade decision explains, it is anything but clear that the IEEPA grants Trump the immense authority he claims; indeed, it clearly does not.
The nondelegation and major-questions doctrines are related, but distinct. The former categorically bans excessive delegations of legislative power to the executive because they undermine the constitutional separation of powers, while the latter merely requires that broad delegations be clearly indicated by Congress. In combination, they aim to constrain executive power grabs, such as that attempted here by Trump.
In addition to vindicating constitutional principles, the decision is a win for the rule of law. Major legal rules should be clearly stated, and not instantly changeable at one person's whim. That is what differentiates the rule of law from the 'rule of men.' Trump's claim to unlimited tariff authority and his repeated gyrations in imposing and lifting tariffs are a blatant affront to this principle. After imposing the Liberation Day tariffs, he soon suspended them for certain electronic goods, struck an ad hoc temporary deal to suspend some tariffs on China, and then proceeded to threaten new tariffs on such products as foreign-produced movies and Apple iPhones. Such one-man rule wreaks havoc on the rule of law—to say nothing of the stable legal environment that investors and businesses need to make plans.
The court's ruling imposes a nationwide permanent injunction blocking the IEEPA tariffs, thus granting relief to all Americans, not just our clients. Still, the litigation is not over. The administration appealed the decision to the U.S. Court of Appeals for the Federal Circuit, asking it to stay the injunction in the meantime. Yesterday, that court granted a brief 'administrative stay' that delays the ruling for a few days as the parties litigate the issue of whether a longer stay should be granted. The case may yet reach the Supreme Court.
A second decision against Trump's IEEPA tariffs was issued yesterday by Judge Rudolph Contreras of the federal District Court for the District of Columbia. Unlike the Court of International Trade ruling, it applies only to tariffs imposed against the two toy manufacturers that brought the case. But notably, Contreras concluded that the IEEPA doesn't grant the president the power to impose tariffs at all, thereby going further than the Wednesday decision did. If the law did grant the sweeping authority claimed by Trump, Contreras—like the Court of International Trade panel—noted, that would be an unconstitutional delegation of legislative power, and 'render IEEPA unconstitutional.' While the impact of the district-court ruling is very limited, it further bolsters the case against Trump's tariffs.
The legal fight over the IEEPA tariffs will continue. But these decisions make me guardedly optimistic. The Court of International Trade ruling was joined by judges appointed by both Republican and Democratic presidents, including one (Timothy M. Reif) appointed by Trump. Judge Restani was appointed by Ronald Reagan, and the third judge who joined the decision, Gary S. Katzmann, was appointed by Barack Obama. This shows that the legal case against these sorts of sweeping, unilaterally imposed tariffs cuts across liberal-conservative lines. The nondelegation and major-questions doctrines on which our case—and this decision—are largely based have been championed by conservative Supreme Court justices. Americans across the political spectrum have an interest in preventing the president from wielding monarchical powers, undermining the Constitution, and starting ruinous trade wars. It's good to see that courts seem to agree.
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