“The New Global Tariffs Are Also Unlawful,” by Philip Zelikow

A very interesting article by my Hoover Institution colleague Philip Zelikow, who is an emeritus history professor (mostly specializing in the history of American foreign affairs) at the University of Virginia, but also a lawyer; here are the introductory paragraphs:

On February 20, the Supreme Court ruled that President Trump’s tariffs imposed under an emergency powers law were unlawful. After raging at the court, the president imposed a new set of global tariffs using a different statutory authority. I participated in the tariff litigation from the start and argued, both to the court and in this Substack, that those tariffs were unlawful.

The new 10 or 15 percent global tariffs, claiming authority from a 1974 law, are also unlawful. When courts look into this, I think they will find that this is not a close case.

In 1976, two years after that law was passed, the US government formally decided that the relevant statutory term, “balance of payments,” had become obsolete after the end of fixed exchange rates and the demise of the Bretton Woods system. The US government would therefore no longer report a “balance of payments” in its statistics. That may be one reason why the old 1974 authorities had never been used. There are better laws available to achieve more sustainable results.

Even though the 1974 law allows the tariffs to be imposed only temporarily, for a maximum of 150 days, the matter may be worth litigating for two reasons. First, the costs, almost all paid by Americans, would run at least into tens of billions of dollars. Second, a number of lawyers fear that the White House may attempt to “rinse and repeat” the temporary tariffs again and again. Sadly, given presidential behavior in some other settings, including the appointment of interim US attorneys, these are not idle fears.

Why the 1974 authorities (section 122) are obsolete

This point can be summarized reasonably briefly. The key aspect to stress is that the government itself formally came to this conclusion. That should be decisive for any court that considers the question.

The landmark Trade Act of 1974 looked back at the dollar crisis of 1971 that had triggered President Nixon’s temporary import surcharge and his decision to end the Bretton Woods system of fixed exchange rates linking the dollar’s value to gold—a gold-dollar standard. The act gave future presidents the statutory power to do what Nixon did (Nixon had originally used trade laws, not emergency powers, to do this). It allowed an import surcharge of up to 15 percent under three circumstances:

1. To deal with large and serious US balance-of-payments deficits,
2. To prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or
3. To cooperate with other countries in correcting an international balance-of-payments disequilibrium.

Back in the Bretton Woods era, a “balance of payments” problem was focused on liquidity, literally that more dollars were going out of the country than were coming in. This was believed to be caused by government expenditures (like military deployments) overseas, plus American private investment overseas being larger than foreign investment in the United States….

The whole thing is much worth reading.