Shortly after taking office, President Donald J. Trump sought to address two “foreign threats” — the alleged influx of illegal drugs from Canada, Mexico, and China…and “large and persistent” trade deficits.
He determined that the drug influx had “created a public health crisis,” and that the trade deficits had “led to the hollowing out” of the American manufacturing base and “undermined critical supply chains,”. Keeping with his assessment, Trump declared a national emergency as to both “threats”, deeming them “unusual and extraordinary,” and invoked his authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs to deal with each “threat” and subsequently, issued several increases, reductions, and other modifications.
Two suits came to be filed against this – one by Learning Resources and the other by V.O.S. Selections.
The plaintiffs in Learning Resources – two small businesses – sued in the United States District Court for the District of Columbia. The V.O.S. Selections plaintiffs—five small businesses and 12 States – sued in the United States Court of International Trade (CIT).
The Trump administration sought to transfer the Learning Resources case to the CIT arguing that only the latter had “exclusive jurisdiction of any civil action commenced against” the Government “that arises out of any law of the United States providing for . . . tariffs” or their “administration and enforcement.” The District Court rejected the prayer and granted a preliminary injunction, concluding that IEEPA did not grant the President the power to impose tariffs.
In the V.O.S. Selections case, the CIT granted the plaintiffs’ motion and set aside Executive Orders that imposed tariffs of unlimited duration on nearly all goods from nearly every country in the world, holding that the tariffs were not authorised by IEEPA.
The Trump administration challenged this before the Federal Court for the District of Columbia where a majority affirmed the CIT’s view that the Trafficking and Reciprocal Tariffs imposed by the Executive Orders under challenge exceeded the authority delegated to the President by IEEPA’s text.
The matters subsequently reached the Supreme Court where the majority on February 20 upheld the view that Trump could not have imposed tariffs under IEEPA and that the US Constitution conferred the power only on the US Congress.
What the SC’s majority judgement said about Trump’s Tariff bid?
The majority said that Article I, Section 8, of the Constitution specifies that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” The Framers recognized the unique importance of this taxing power—a power which “very clearly” includes the power to impose tariffs…And they gave Congress “alone . . . access to the pockets of the people”.”
The judges note that “the Framers did not vest any part of the taxing power in the Executive Branch.”
It said the Trump administration “concedes that the President enjoys no inherent authority to impose tariffs during peacetime” but “relies exclusively on IEEPA to defend the challenged tariffs. It reads the words “regulate” and “importation” to effect a sweeping delegation of Congress’s power to set tariff policy—authorizing the President to impose tariffs of unlimited amount and duration, on any product from any country.”
The Supreme Court said it “has long expressed “reluctance to read into ambiguous statutory text” extraordinary delegations of Congress’s powers…In several cases described as involving “major questions,” the Court has reasoned that “both separation of powers principles and a practical understanding of legislative intent” suggest Congress would not have delegated “highly consequential power” through ambiguous language…These considerations apply with particular force where, as here, the purported delegation involves the core congressional power of the purse. Congressional practice confirms as much. When Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits.”
But “against that backdrop of clear and limited delegations, the Government reads IEEPA to give the President power to unilaterally impose unbounded tariffs and change them at will”, the SC said adding “that view would represent a transformative expansion of the President’s authority over tariff policy.”
The judgement said “it is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope. That “ ‘lack of historical precedent,’ coupled with the breadth of authority” that the President now claims, suggests that the tariffs extend beyond the President’s “legitimate reach”.”
The “ ‘economic and political significance’ ” of the authority the President has asserted likewise “provides a ‘reason to hesitate before concluding that Congress’ meant to confer such authority.”.., The stakes here dwarf those of other major questions cases. And…“a reasonable interpreter would not expect” Congress to “pawn” such a “big-time policy call…off to another branch”,” the judgement said.
The top court said “there is no exception to the major questions doctrine for emergency statutes. Nor does the fact that tariffs implicate foreign affairs render the doctrine inapplicable.”
The majority said that “IEEPA authorizes the President to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation.” Absent from this lengthy list of specific powers is any mention of tariffs or duties. Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes.”