In the latest defeat for President Donald Trump’s protectionist trade agenda, a federal appeals court ruled that the tariffs he placed on imports from other countries were improperly instituted. Trump and his administration responded by saying tariffs were necessary not only to bring in federal revenue but for the country’s very survival.
On Friday, the U.S. Court of Appeals for the Federal Circuit upheld lower courts’ rulings that Trump overstepped his authority when he unilaterally imposed double-digit tariffs on nearly every other country.
Trump had justified the move under the International Emergency Economic Powers Act (IEEPA). That 1977 law allowed presidents, upon the declaration of a national emergency, to take certain actions, like issuing sanctions, without involving Congress.
But invoking the IEEPA to impose tariffs on any nation, much less on the entire planet, was a novel interpretation of the law, which the court noted. “The court’s majority was deeply skeptical of the government’s claim to broad powers that are not spelled out in the IEEPA law, which notably does not contain the word ‘tariff,'” Reason‘s Eric Boehm wrote Friday. “If the government’s interpretation of the IEEPA statute is correct, the court ruled, that would create ‘a functionally limitless delegation of Congressional taxation authority.’ Elsewhere in the ruling, the court said that such a delegation of taxation power would be unconstitutional, even if that were what Congress intended to do.”
While the majority also removed a lower court’s injunction against the tariffs’ implementation, the decision is a positive step, hopefully bringing us one step closer to a world where the president cannot unilaterally raise or lower tariff rates on a whim.
For months, Trump has claimed the tariffs are not only necessary but that they’re working: Ahead of Labor Day, the White House wrote on X, “President Trump’s protectionist trade policies have helped drive more than $8 trillion in new U.S. investment, creating hundreds of thousands of jobs.” But even under the rosiest possible projections, that number is nowhere close to reality.
Of course, that puts the government in an awkward position, when all that mostly fictional money suddenly goes away. Indeed, the Trump administration described the court’s ruling in downright apocalyptic terms.
“If these Tariffs ever went away, it would be a total disaster for the Country” and “would make us financially weak,” Trump posted on Truth Social.
“Without Tariffs, and all of the TRILLIONS OF DOLLARS we have already taken in, our Country would be completely destroyed, and our military power would be instantly obliterated,” he added, in a post the White House shared with the caption, “Trust in Trump.”
White House trade adviser Peter Navarro agreed, telling Fox News that “if we lose the case, President Trump is right, it will be the end of the United States.”
This argument has formed part of the administration’s argument since the case began. “The President believes that our country would not be able to pay back the trillions of dollars that other countries have already committed to pay, which could lead to financial ruin,” U.S. Solicitor General John Sauer and Assistant Attorney General Brett Shumate wrote last month in a letter to the court. “One year ago, the United States was a dead country, and now, because of the trillions of dollars being paid by countries that have so badly abused us, America is a strong, financially viable, and respected country again.”
“If the United States were forced to pay back the trillions of dollars committed to us, America could go from strength to failure the moment such an incorrect decision took effect,” they warned. “In such a scenario, people would be forced from their homes, millions of jobs would be eliminated, hard-working Americans would lose their savings, and even Social Security and Medicare could be threatened. In short, the economic consequences would be ruinous, instead of unprecedented success.”
Sauer and Shumate are probably correct that Trump “believes” this. But everything else they wrote is complete fantasy.
The U.S. was not “a dead country” a year ago—at least, no more than it is today. The economy is growing while inflation remains steady, but imports are down and job numbers are anemic.
And it’s certainly not the case that America’s fortunes have completely turned around in 12 months because of cash flowing in from other countries.
Revenue from Trump’s tariffs so far total $159 billion—double what was taken in the year before, but well-short of the “trillions of dollars” Sauer and Shumate promised. Just a sentence later, they acknowledged the money was not yet collected but merely “committed to us,” though they still hold that not collecting all that theoretical cash would somehow have devastating consequences.
Of course, no discussion of Trump’s tariffs is complete without mentioning that no matter how many millions, billions, or trillions of dollars are taken in, that money is paid by Americans, not by malign foreign countries that have been brought to heel. Tariffs are collected at ports of entry by Customs and Border Protection; the companies importing the products then either eat the extra cost or, in the more likely scenario, pass the cost on to the consumer.
In that light, it’s not only ridiculous but insulting for the administration to insist dark times for the nation are ahead if we don’t extract trillions of dollars from Americans.
