Trump Imposes Massively Harmful and Illegal Section 301 Tariffs

Today, the Trump Administration announced massive new tariffs, supposedly authorized by Section 301 of the Trade Act of 1974:

The Trump administration on Thursday finalized new double-digit tariffs on dozens of U.S. trading partners as it seeks to reconstitute sweeping duties struck down by the Supreme Court in February.

The new duties, which range from 10 to 12.5 percent, follow a five-month investigation into trading partners’ efforts to root out products made with forced labor from their supply chains and are set to take effect just as a temporary global 10 percent tariff expires.

Starting Friday, 17 trading partners — including Canada, the European Union, Indonesia, the United Kingdom and Mexico — will face a 10 percent duty, along with another 10 countries that agreed to address forced labor through signed trade agreements with the U.S.

Another 43 other countries, including Japan, China, South Korea and Australia, will face a 12.5 percent tariff rate….

The Section 301 tariffs may be meant to replace temporary Section 122 tariffs, which expire today, and which were rightly invalidated by the US Court of International Trade in May (though appellate litigation continues, and Trump may yet hope to use Section 122 again). The new tariffs will predictably raise prices for consumers, reduce economic growth, inflict grave harm on the US economy, and further poison our relationships with allies and trading partners.

As I have previously explained, the planned Section 301 tariffs are illegal for some of the same reasons as the IEEPA tariffs invalidated by the Supreme Court in February, in a case I helped litigate. Georgetown University scholar Peter Harrell outlined some additional reasons why the Section 301 tariffs are illegal, in a guest post here at this site. Unlike IEEPA, Section 301 does authorize some tariffs. But it does not permit a massive power grab like this.

In a Dispatch article published today, my Cato Institute colleague Scott Lincicome – an expert on trade policy – explains in detail why the forced labor “investigations” supposedly justifying the Section 301 tariffs are a sham, and a pretext for a massive presidential power grab. As he notes, the conclusion of the “investigations” was clearly predetermined in advance, the tariffs imposed have no real connection to any genuine forced labor issues, and many of the countries subject to the massive new tariffs actually have tighter restrictions on goods produced by forced labor than the US itself does. He concludes that, if courts uphold these tariffs, the president would have the kind of unlimited tariff authority the Supreme Court denied him in the IEEPA case:

If the courts do rubber-stamp these tariffs, their problems will likely extend well beyond just this sham case. Section 301 could become a way for USTR to tariff any country, at any rate, and for any reason and duration, as long as it checks the law’s minor procedural boxes. The actual merits of the case, the quality of the agency’s findings, or its efforts to consider public input won’t really matter. Just say a country doesn’t adequately do something you say is harmful and then apply blanket tariffs after meaningless hearings and comments. Voila.

This is precisely the open-ended tariff power grab the courts checked with their IEEPA rulings, just with a little more procedural window-dressing. In such a case, Section 301 would be a broad tariff generator instead of the targeted tool Congress thought it designed, and it’ll surely be used by Trump or any future president who wants to tariff trading partners over carbon emissions, labor standards, AI regulation, or anything else. Republicans cheering the forced labor tariffs today should consider how they’ll feel when a Democrat holds the tariff pen.

As explained in my and Peter Harrell’s earlier posts on the Section 301 tariffs, Trump’s policy violates the requirements of Section 301 itself, and also runs afoul of the major questions doctrine, which requires Congress to “speak clearly” when authorizing the executive to make “decisions of vast economic and political significance.” At the very least, Section 301 does not clearly authorize the president to start a massive trade war against almost all our major trading partners on the basis of a sham investigation and dubious pretexts.

If, somehow, Section 301 does authorize this action, it would violate the constitutional nondelegation doctrine, which limits delegation of legislative power to the executive. Tariffs are a specifically enumerated congressional power. While the Supreme Court’s nondelegation precedent is far from completely clear, last year’s decision in FCC v. Consumers’ Research held that delegations of the power to impose taxes and other financial levies must have a clear “floor” and “ceiling” and that “[t]he guidance needed is greater when an agency action will affect the entire national economy than when it addresses a narrow, technical issue” [quotation omitted]. There is no meaningful floor or ceiling under the administration’s approach to Section 301. And the power claimed is clearly one that massively affects the “entire national economy.”

In the IEEPA case, the Supreme Court emphasized that “the president does not have the power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” Chief Justice Roberts went on to note that, while some statutes do grant the president tariff authority (among which he specifically cited Section 301), “[w]hen Congress has delegated its tariff powers, it has done so… subject to strict limits.”

Trump’s power grab today respects no such limits. I hope and expect it will be challenged in court. And when that happens, courts should strike it down, just like they did with the IEEPA  and Section 122 tariffs.