The Supreme Court’s recent ruling against the legality of President Donald Trump’s tariffs was fundamentally about the rule of law and Constitutional intent.
While the ruling may have holed the president’s economic policy below the waterline, that’s because his tariff-setting spree, represented under the auspices of the International Emergency Economic Powers Act, was an extraordinary and unprecedented power grab by the executive of precisely the sort the Constitution was designed to prevent.
Let’s start, as Maria did in The Sound of Music, at the very beginning. Before the American Revolution, the British government tried repeatedly to increase revenue from the American colonies. The Stamp Act of 1765 particularly annoyed the colonists as it imposed taxes on their internal commercial activities. So, the British Chancellor (finance minister) Charles Townshend decided to call the colonists’ bluff and impose taxes on their imports — what we would today call tariffs. Incidentally, many of these tariffs were imposed on imports managed by protected industries, such as the East India Company and its monopoly on the tea trade.
HOW THE TARIFFS RULING COULD COMPLICATE TRUMP’S NEXT SUPREME COURT NOMINATION
The tariffs were imposed on colonists by faraway Westminster without any input from colonial representatives, and that annoyed the colonists as much as the price itself. Hence, “No taxation without representation” and, later, the reason the Constitution firmly vests the power to tax — including the power to tariff — in the Congress. Alexander Hamilton, the architect of most early tariffs, acknowledged as much in Federalist 35.
That was what the court found, but some justices disagreed. Justice Clarence Thomas, a good man of conviction, believes Congress has the right to delegate the taxing and tariff power to the executive branch. Yet it is hard to square that with the framers’ experience with taxation and the executive. As Justice Neil Gorsuch rhetorically asked, “Are we really to believe that the patriots that night in Boston Harbor considered the whole of the tariff power some kingly prerogative?”
Moreover, many of the early debates in the new U.S. legislature were about tariffs. Those early Congresses debated tariff levels in minute detail. Hamilton’s Report on Manufactures was a document prepared by Hamilton as treasury secretary but presented to the Congress, not the president. In it, Hamilton carefully weighs the pros and cons of each tariff he proposes. Congress did not rubber-stamp it, instead leaving many of his proposals unenacted.
The framers intended, and early practice demonstrated, that Congress should exercise its powers of taxation very carefully, with due deliberation and scrutiny. The court majority in Learning Resources, Inc. v. Trump is, therefore, surely correct that Congress cannot delegate this fundamental power as carelessly as hiding it in the single word “regulate” in the International Emergency Economic Powers Act — an emergency powers statute historically used for sanctions and asset freezes, not general trade policy.
As the court majority said, if that were the case, then Congress gave the president power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” That would be a huge and sweeping delegation, and therefore a huge and sweeping abrogation of the sacred responsibility the Constitution places on the legislature on behalf of the people.
Yet that’s how the president has acted. As well as his vacillating tariffs on every country since his so-called “Liberation Day,” he has raised tariffs: on Canada in response to a TV ad by a provincial government that quoted President Ronald Reagan’s free trade views; on Brazil because of its supposed persecution of his friend, former President Jair Bolsonaro; and on Switzerland in ire over the tone the country’s leader took with him in a phone call.
This is why Gorsuch’s concurrence in Learning Resources is so important: “The deliberative nature of the legislative process was the whole point of its design. Through that process, the Nation can tap the combined wisdom of the people’s elected representatives, not just that of one faction or man.” Such deliberation lends certainty to the governing process and, therefore, to the ability of us all to live peaceful lives, unbuffeted by the winds unleashed by a single man’s whims, whether king or unconstrained president.
A world with unfettered tariff power, whether illegally delegated by Congress or asserted by an over-mighty executive, is disrespectful to the public.
Meanwhile, in the wake of the ruling, the president immediately declared his intent to continue imposing tariffs under the auspices of a different statute. The reach of the Learning Resources ruling, however, is not lost. The law that the president has turned to in an effort to rescue some of his policy requires congressional approval after 150 days — implicitly conceding that tariffs are legislative in nature. There is also some dispute as to whether the president can even rely on that law.
THE SUPREME COURT GOT IT RIGHT
A clear-eyed look at the Constitution in the context of the 1776 Revolution provides the answer to our modern problem. Taxes, including tariffs, must be authorized properly by the people’s representatives in Congress.
Otherwise, why are we celebrating the nation’s 250th anniversary at all?
Iain Murray is a senior fellow with the Competitive Enterprise Institute, a free-market public policy organization based in Washington, D.C., and co-author of Trade Under Blockade and Traders of the Lost Ark.