Trump's tariffs are bad economics, bad politics and unconstitutional
An injunction from the little-known Court of International Trade 'permanently enjoined' President Trump on Wednesday from enforcing many of his tariffs under the 1977 International Economic Emergency Powers Act. Neither executive authority nor congressionally delegated power allows the President to institute unprecedented global tariffs using emergency powers, the federal court unanimously ruled.
On Thursday, a second federal court also blocked most of Trump's tariffs, including the so-called 'Liberation Day' ones. But just hours later, the Court of Appeals for the Federal Circuit temporarily paused the trade court's block.
These rulings bring to forefront two constitutional debates in American history: the limits of executive authority and the right of Congress to regulate commerce. The Court of International Trade is correct to limit executive authority. Before a prostrate GOP-led Congress, the judgment reminds elected officials about the sources and legitimacy of their power: the American people and their Constitution.
The Commerce Clause of the Constitution gives Congress the power to 'to regulate commerce with foreign Nations, and among the several States, and with the Indian Tribes.' Initially enacted to regulate interstate commerce, over the last 250 years the law evolved to increase federal authority over international commerce and restrict one state's ability to regulate commerce in another. Powers reserved to the states, which Republicans traditionally championed, have stood against granting Congress unchecked authority to regulate commerce.
Presidents have historically claimed vast executive authority. Before Trump, several presidents employed the International Economic Emergency Powers Act to place economic sanctions on states that threatened U.S or international security.
But Trump's use of the International Economic Emergency Powers Act for tariffs was unprecedented. In its 49-page ruling, the trade court noted that Congress does not provide the president 'unbounded tariff power' and that the law would only be valid to 'deal with an unusual and extraordinary threat with respect to which a national emergency has been declared.'
Trump invoked emergency powers on two grounds: a purported fentanyl import crisis from Canada and Mexico, and the supposed worldwide lack of reciprocity on trade. Empirical evidence on the former, especially in the case of Canada, was spurious, despite the administration's continuing dissembling about fentanyl seizures. On trade reciprocity, the administration concocted a mathematical formula equating lack of reciprocity with trade deficits that makes no sense on economic grounds, let alone the practical and profitable aspects of businesses.
Congress ought to have stepped in at this point, but it lacked the spine to act. In fact, the trade court called attention to the 'improper abdication of legislative power.'
The trade court heard two cases, a lawsuit led by Oregon from 12 Democratic state attorneys general and another from a group of small businesses. In the former case, states' rights are being asserted by Democratic states arguing that Trump's tariffs stood in the way of provision of services. Conservatives, including Trump, often appeal to states' rights on issues such as religion, guns, schools, abortion, marriage and civil rights.
The small business case was led by a wine-making company named VOS Selections, which argued that tariffs would make the business unprofitable. Economists would agree, as did the trade court. While small businesses went to the trade court, big business has been strategically vocal about the harmful impact of tariffs.
With neither the businesses nor the states supporting the president's trade policy, one must ask whom the president represents in his trade policy measures. Public polling on trade might provide an answer: die-hard MAGA supporters, who tend to be rural, under-educated and fearful of anything global or cosmopolitan. They are entitled to these fears. The question is if the president can enact trade policy on their behalf. The answer is yes only if one agrees with Trump's political calculations, not the Constitution.
At the trade court, Trump's lawyers made a political argument, ostensibly on behalf of the MAGA fearful. They contended that these tariffs were necessary and that the president had the political mandate to negotiate new trade measures with countries around the world. The three-judge panel — made up of Reagan, Obama and Trump appointees — unanimously dismissed these political claims. Instead, the panel focused on the legal and constitutional limits on executive power.
The immediate appeal to the Circuit Court provided an at least temporary victory, and the case is likely to be heard by the Supreme Court. The White House already has a new argument that unelected judges cannot rule on these matters. Not only does this argument negate constitutional checks on executive power, but the president also continues to overestimate his electoral mandate.
An emerging set of conservative champions of executive authority, citing classic sources, almost equate presidential power with the absolute or divine rights of kings. Vice President JD Vance in particular propounds such views. These 'divine right conservatives' now must confront the traditional champions of pragmatic conservatism in America: businesses, consumers, markets and the states.
The courts are unlikely to uphold new conservative arguments for unchecked executive power. The Supreme Court has leaned in favor of states' rights on many questions. In the case of trade, the states' rights argument is now the bailiwick of Democratic states. Politics continues to make for strange bedfellows.
In the meantime, markets rose after the court ruling Wednesday.
J.P. Singh is Distinguished University Professor at Schar School of Policy and Government, George Mason University, and Richard von Weizsäcker Fellow with the Robert Bosch Academy (Berlin). He is co-editor-in-chief of Global Perspectives.
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