Trump’s illegal tariffs are again ruled to be illegal

Trump’s illegal tariffs are again ruled to be illegal

The decision by the US Federal Court of Appeals on Trump’s tariffs was surprising. It was 7-4 in upholding the Court of International Trade’s finding that the tariffs were illegal. Why was it surprising? Not because the lower court’s decision was upheld but because of the vote. I thought it was going to be unanimous like the lower court but it was 7-4. No lawyer am I but I had thought that tariffs were the purview of the Congress and not the president – although the president could impose tariffs under certain circumstances. I also thought that the courts would find that the declaring trade deficits a national emergency under the International Emergency Economic Powers Act in order to impose tariffs was so laughable that it would be thrown out of court. Not so fast my friends.

First, when the ruling by the appeals court was handed down, the president went off in his usual bellicose manner. He tweeted:

Again, it was the 7-4 vote that was interesting. The president said it was partisan. But was it? Of the seven in the majority, yes 6 were appointed by either Obama or Biden but of the four that dissented two were appointed by George W. Bush and two were appointed by Obama. What is intriguing is that the dissenting opinion was written by an Obama appointee who has ruled consistently in favor of executive overreach. This is consistent with what I have been warning. What Trump is doing in defining the powers of the executive will be used by the next democrat that occupies the White House. And then the republicans will be wailing and gnashing of their teeth bemoaning executive overreach. Remember what is sauce for the goose. The court’s ruling will not take effect until October 14 allowing the administration time to appeal to the Supreme Court.

While the government tried to argue that the tariffs were a response to the so-called (and imaginary) national emergency caused by the trade deficits, the appeals court instead concentrated on the tariffs being a tax and said:

“While the President of course has independent constitutional authority in [foreign affairs and national security], the power of the purse (including the power to tax) belongs to Congress. Absent a valid delegation by Congress, the President has no authority to impose taxes.”

And there’s the rub. There are two salient points here. First, is a trade deficit a basis for the declaration of a “national emergency” and second, are tariffs a tax? The court acknowledged that if indeed there were a national emergency, the president did have limited authority to impose temporary tariffs targeted to specific aims. For example, the tariffs imposed on Canada, Mexico and China to limit fentanyl could possibly stand. Also the tariffs on steel and aluminum were imposed under the Trade Expansion Act and are not including in this ruling. Second, are the tariffs a tax? An economist would argue that they are in fact a border tax imposed on imported goods at the port of entry. Can the administration argue otherwise? This is reminiscent of the arguments on Obamacare where Chief Justice Robert’s decisive vote was on the basis that Obamacare was a tax and hence in the purview of the congress. If this logic carries over to the tariffs, then I would expect a decision upholding the lower courts that the tariffs imposed under the International Emergency Powers Act are illegal. Again I would expect a unanimous vote but now I am now so certain.

What is particularly interesting to me is the presidential misuse of the international Economic Emergency Powers Act. As one legal scholar points out “The Act is intended to enable sanctions against individual countries that pose a national-security threat—not a persistent, broad, social or economic

Dynamic.” So since China is a threat to the national security, an imposition of tariffs to that country (or to Russia, Iran or North Korea) would be allowed. Where Trump erred is using this particular statue to impose worldwide global tariffs on countries that do not pose a national security threat to the US. Stay tuned.