Yesterday, the Court of Appeals for the Federal Circuit upheld, on a 7-4 vote, a decision by the United States Court of International Trade that President Trump’s emergency “reciprocal” tariffs are illegal. The Constitution gives power over tariffs to Congress. The question is whether Congress’s grant of powers to the president covers certain of Trump’s tariffs:
This case involves the extent of the President’s authority under IEEPA to “regulate” importation in response to a national emergency declared by the President. For many years, Congress has carefully constructed tariff schedules which provide for, in great detail, the tariffs to be imposed on particular goods. Since taking office, President Donald J. Trump has declared several national emergencies. In response to these declared emergencies, the President has departed from the established tariff schedules and imposed varying tariffs of unlimited duration on imports of nearly all goods from nearly every country with which the United States conducts trade.
The court held that Trump’s tariffs exceed the authority that he has been granted by Congress. When the International Court of Trade decision to the same effect was rendered, I wrote that it seemed correct. I have not undertaken an extensive legal analysis, and that is not my purpose here. Yesterday’s Court of Appeals decision stayed enforcement of its order so that the Supreme Court can address the case. Perhaps it will see things Trump’s way, but I am skeptical.
Importantly, this case does not reach all of Trump’s tariffs. I am not clear on what tariffs might survive this ruling, assuming it is upheld.
For the moment, I will make only this point: we were told that the tariffs would be an economic disaster. Trade would come to a standstill, our economy would suffer, the stock markets would crash. The markets did indeed waver, initially. But they quickly rebounded. Do investors still believe that Trump’s views on trade are anathema? If so, the markets should skyrocket on Tuesday. But I predict that they won’t. I think investors, the most interested and sophisticated observers, have concluded that Trump wasn’t entirely wrong about fair trade, after all.
Ultimately, tariffs will be up to Congress, as Article I provides.
