Big news yesterday and today on the tariff front. Yesterday, the U.S. Court of International Trade ruled that President Trump’s “Worldwide and Retaliatory Tariffs” and “Trafficking Tariffs” on goods from Mexico and Canada exceed the authority delegated to him by Congress. The administration immediately appealed that ruling, and today it was stayed by the Federal Circuit pending further litigation. So the tariffs remain in place, for the moment.
The Constitution gives Congress, not the president, the power to “lay and collect
Taxes, Duties, Imposts and Excises,” and to “regulate Commerce with foreign Nations.” By statute, Congress has delegated some of that authority to the president. The issue in the case before the Court of International Trade was the extent of that delegation.
You can read the court’s opinion, which is lengthy and rather technical, here. I am not an expert in this area of the law, but to me the decision seems plausible, and likely correct. It was a 3-0 decision, so there was no dissent–something that is useful in assessing the strength of nearly any court decision. The court points out that it would clearly be unconstitutional for Congress to delegate all of its authority over tariffs to the executive branch. So the question is, what is the scope of Congress’s statutory delegation, and does it cover the tariffs Trump has imposed?
This is not a case where the Democrats have shopped for a partisan judge to obtain a political but legally indefensible order. The three International Trade judges who decided the case are quite distinguished, and they include one Obama appointee, one Trump appointee, and one Reagan appointee.
This case will be fought out in the courts for some time to come. It is notable that the stock markets barely reacted at all to the Court of International Trade’s ruling. That suggests that investors understand that we have a long way to go in the judicial process, and perhaps the anxiety over trade that drove market gyrations a couple of months ago was overblown.
At the moment, the administration is in the midst of negotiating new trade deals with many foreign nations. Trump’s tariffs were intended mostly to give him a starting point for negotiations. The most practical impact of the Court of International Trade Court’s ruling is that it weakens Trump’s hand in those negotiations. But perhaps foreign governments, like stock market investors, will not over-react to a single court decision, whether it is well-founded or not.
