My New Boston Globe Article on Why “Trump’s New Tariffs are Another Dangerous Presidential Power Grab”

On Friday, the Supreme Court struck down the sweeping tariffs President Trump had imposed under the International Emergency Economic Powers Act of 1977. In a 6-3 decision, the court rightly held that IEEPA does not authorize tariffs.

Among the cases the court decided with this ruling was V.O.S. Selections Inc. v. Trump, which the Liberty Justice Center and I filed on behalf of five small businesses harmed by the tariffs. The ruling was a major victory for the constitutional separation of powers and the rule of law. The justices rightly held that no one man can impose tariffs at will; under the Constitution, the power to tax is reserved to Congress.

As Chief Justice John Roberts Jr. explained in his majority opinion, Trump could not rightfully claim the power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.”

But in the aftermath of the decision, Trump has attempted to reconstitute his tariff power by reinstating most of the tariffs using a 1974 law. If allowed to stand, this action would undermine the constitutional system almost as much as the IEEPA tariffs did.

Shortly after the court’s decision, Trump issued a proclamation invoking Section 122 of the Trade Act of 1974 to impose 10 percent global tariffs. The next day, he increased the rate to 15 percent — though as of Tuesday, the administration implemented only 10 percent tariffs. Section 122 only permits tariffs for up to 150 days in response to “fundamental international payments problems” that cause “large and serious United States balance-of-payments deficits” or “an imminent and significant depreciation of the dollar,” or are to cooperate with other countries in addressing an “international balance-of-payments disequilibrium.”

As conservative legal commentator Andrew McCarthy explained in National Review, none of these legal preconditions to the use of Section 122 exist. Nor is the scheme part of some plan of international cooperation.

A balance of payments deficit can only arise in a fixed exchange-rate system, like the one the United States had before 1973, when the federal government took part in the Bretton Woods system of fixed exchange rates backed by US gold reserves. In that situation, the United States could experience a shortage of official currency reserves when demand for dollars at the fixed rate increased, or a shortage of gold arose. Since the introduction of floating exchange rates in 1973, that problem has been eliminated. As Nobel Prize-winning monetary economist Milton Friedman explained in 1967, “a system of floating exchange rates completely eliminates the balance-of-payments problem. The [currency] price may fluctuate but there cannot be a deficit or a surplus threatening an exchange crisis.” When Section 122 was enacted in 1974, it was not yet clear whether the flexible exchange rate system would continue indefinitely. Since it did, Section 122 has never been used until now…

The Section 122 tariffs will likely soon be challenged in court. If judges wrongly defer to Trump’s claims that a balance-of-payments crisis exists, Section 122 could become the kind of blank check for executive imposition of tariffs that the court rejected in the IEEPA case. When the president invokes sweeping emergency powers like those of IEEPA or Section 122, courts must ensure that the emergency in question actually exists. Otherwise, we risk a dangerous expansion of executive power.

In his concurring opinion in the IEEPA case, Gorsuch warned that if courts failed to police executive power grabs, “[o]ur system of separated powers and checks-and-balances threatens to give way to the continual and permanent accretion of power in the hands of one man.” That principle applies to Trump’s latest tariff power grab, as well.