Assistant Attorney General Brett Shumate did his best to defend President Donald Trump’s “Liberation Day” tariffs in front of the 11-judge panel of the U.S. Court of Appeals for the Federal Circuit Thursday, but he is arguing an unprecedented case and the judges on the panel, particularly the eight appointed by Democrats, signaled they were highly skeptical of the infinite powers Trump has claimed over tariff policy.
The panel did not indicate when they will issue a decision on the matter, so there is no way of telling when the Supreme Court will eventually hear Trump’s inevitable appeal. However, considering the court’s recent “major questions” jurisprudence touching President Joe Biden’s abuse of executive power on energy and higher education, the White House should begin developing an alternative path to keeping its tariff policy in place.
Article 1, Section 8 of the Constitution grants Congress, not the president, the exclusive power to “lay and collect Taxes, Duties, Imposts and Excises” and to “regulate Commerce with foreign Nations.”
From the founding of the nation up through 1930, Congress regularly debated and passed changes to tariff rates on goods, including molasses, iron, steel, cloth, glassware, sugar, and coal. The Smoot-Hawley tariff is really the last time Congress raised specific tariffs, and it has largely delegated tariff authority to the executive branch since 1934. But the specific wording of these transfers of power is essential, and most of these laws grant the president the power to lower, not raise, tariffs.
In 1971, President Richard Nixon used one of these laws to impose a tariff surcharge on certain categories of imported goods. A federal appeals court held this was a valid use of delegated authority because Nixon’s tariffs were limited in scope and were related to the type of emergency mentioned in the statute.
Upset that a federal court had sanctioned Nixon’s perceived abuse of executive power, in 1977 Congress passed the International Emergency Economic Powers Act to limit, not increase, the executive’s emergency trade authorities. The Supreme Court has since upheld presidential use of IEEPA powers, most famously when it held that IEEPA justified President Jimmy Carter’s freezing of Iranian assets in response to the seizure of the American Embassy in Tehran. But the Supreme Court has also held that presidents have abused the IEEPA, most recently when it held that Trump himself could not use it to ban TikTok.
The Federal Circuit Appeals panel seemed highly skeptical of Trump’s claim that the IEEPA gave the president unlimited power to set tariff rates on every good and service imaginable for an infinite amount of time. “One of the major concerns that I have is that IEEPA doesn’t even mention the word tariffs anywhere,” Judge Jimmie Reyna said from the bench. “It’s just hard for me to see that Congress intended to give the president in IEEPA the wholesale authority to throw out the tariff schedule that Congress has adopted after years of careful work, and revise every one of these tariff rates,” Judge Timothy Dyk added.
The Supreme Court has been highly skeptical of vast claims of executive power based on narrow grants of discretion from Congress. Most recently, in West Virginia v. Environmental Protection Agency and Biden v. Nebraska, the Supreme Court held that the Clean Air Act did not give Biden the authority to shut down the nation’s coal power plants, and that the Higher Education Relief Opportunities for Students Act did not authorize him to erase hundreds of billions of dollars in college debt.
The Supreme Court may seem to have favored Trump in the past, but it has ruled against Trump on key questions, including not just the TikTok question mentioned above, but also on immigration in 2020 (Department of Homeland Security v. Regents of the University of California) and the Census in 2019 (Department of Commerce v. New York). Trump may argue that he has inherent Article II powers to conduct foreign policy, and that tariffs are part of that power. Still, the Constitution is clear: the tariff power lies with Congress, not the executive. Trump simply has not identified any transfer of tariff power as broad and as permanent as he is asserting.
The Supreme Court will eventually rule against Trump on tariffs. The good news is that Trump, and Congress, have time to prepare. While Republicans are almost universally opposed to tax hikes, many have become intrigued with how well Trump’s tariffs have raised revenue and reduced the deficit. The federal budget was even balanced for the first time in decades this June.
CALIFORNIA’S PATHETIC POWER POLICIES
During the most recent reconciliation debate in Congress, Sen. Ron Johnson (R-WI), a former businessman with impeccable free market credentials, raised the possibility of codifying Trump’s tariffs as a way to reduce the deficit. The Washington Examiner hears there are many others in the Republican caucus who are also open to the possibility. Such a tax hike may even be bipartisan. But if it is not, Republicans could pass another reconciliation bill. Nothing is more germane to budget reconciliation than a tax hike that reduces deficits.
The White House may wish not to move legislatively, thus increasing political pressure on the Supreme Court not to undermine tariff negotiations with other countries. But the White House would also be wise not to place all its wagers on the Supreme Court suddenly embracing unlimited executive power over trade, a power the Constitution explicitly gave to Congress. The more prudent move would be to start working with lawmakers such as Johnson to prepare a legislative Plan B for when Trump loses at the Supreme Court.