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Ever since the Ancient Greeks recited their stories of epic tragedy, humankind has contemplated events going beyond the control of those that set them in motion. Historians still argue about why World War I occurred, whether it was necessary. Once mobilization for war took place, the outcome became unavoidable.
This week a trade war with Canada and Mexico did not take place. It was deferred for 30 days, maybe longer. The threatened 25 percent additional American tariffs on almost all of the products of its two neighbors was postponed.[1] The measure originally set to go into effect on February 4, Tuesday, was to have applied to US imports that total about $411 billion annually from Canada and $409 billion from Mexico. In response, Canada and Mexico had drawn up lists of retaliatory tariffs to go into effect automatically when America’s additional duties were in place. The beginnings of what could become a new festering national enmity between the US and its closest friend, Canada, were heard when Canadian audiences booed the singing of the American national anthem at sporting events.
The three countries now have just short of 30 days to avoid a trade war. The stakes are very high. Warwick McKibbin and Marcus Noland have calculated the effects of the disruption of the economies of the three nations. Kimberly Clausing and Mary Lovely have tallied the expected costs to every household in America, particularly lower-income households. To avert very real costs, both in terms of relations with close friends and allies and in harm to their economies and ours, thought should be given to avoiding disasters that are avoidable.
Part of the problem lies in the fact that new tariffs on Canada, Mexico, China, and a growing list of others can be imposed so readily, seemingly overnight, without any required notice or process, without much study or deliberation. The tragedy on the movie set of Rust, with an unnecessary death caused by a hair trigger on a gun that should not have been loaded, nor pointed at another, is upscaled when nations engage in either trade or shooting wars. The statute President Donald Trump is relying on has a hair trigger.
How did new tariffs against America’s neighbors come to be authorized under US law? Did Congress delegate this authority? Could it do so?
Trump’s executive orders imposing tariffs cited as authorities the US Constitution and several laws. The two key provisions cited are Section 301 of the Trade Act of 1974, which grants authority to retaliate against other countries for unreasonable acts that burden US commerce, and the International Emergency Economic Powers Act (IEEPA), which gives presidents wide latitude to respond to national emergencies. Both were cited in President Trump’s tariff executive orders. The retaliatory authority may have been included because it has been used in the past to deal with China, and the order called for additional 10 percent tariffs on Chinese goods as well. It is likely that the IEEPA is the primary authority included for the tariffs aimed at Canada and Mexico.
The IEEPA has never been used for imposing tariffs. However, its language is extraordinarily broad—the enumerated authorities granted to the president by Congress is virtually unlimited—including the seizure of property to deal with a national emergency. Trump’s stated reason for imposing these additional tariffs is to get the targeted countries to curb the flow of illegal drugs (fentanyl) and unauthorized immigrants into the US.
The IEEPA is not being used here to try to halt fentanyl shipments directly (e.g., applying sanctions to the shippers) but to force Canada and Mexico to deploy extra resources to crack down on this illicit trade. Similarly, the law is cited to force Canada and Mexico to stop illegal immigration across the Canadian and Mexican borders into the US. The new tariffs will apply to all products—fruits and vegetables, prepared foodstuffs, lumber, steel, home appliances, fuel, clothing, footwear, electrical machinery and electronic goods, toys and sports equipment, to name a few. The orders do not provide for exceptions.
The one precedent related even tangentially to Trump’s Mexico and Canada tariffs is the 10 percent import surcharge that President Richard Nixon levied on August 15, 1971, under the predecessor authority to the IEEPA. That surcharge on all dutiable US imports was used as leverage to get countries to revalue their currencies against the dollar. The import surcharge was lifted four months later after the Smithsonian Agreement at the Smithsonian Institution castle led to new exchange rate parities. There was clearly an international economic and monetary emergency at that time to which general trade was relevant.
Illegal immigration has been a problem for some time, but rather than supporting measures to reduce it, candidate Trump had intervened to prevent legislation from passing Congress to put additional resources on the US side of the border.
President Trump’s new tariffs on imports from Canada, Mexico, and China will certainly be challenged in the US courts. Every presidential action limiting imports is always challenged by those who import.
There is a common assumption that the Supreme Court will allow this president to do anything despite any laws to the contrary. Granted that a Supreme Court ruling last year went very far in giving him freedom from prosecution under criminal laws for his official acts; it nevertheless did not transfer any powers under the Constitution that have not been properly assigned in that document to the president or properly delegated to the president by Congress. From a series of election-related cases, it is clear that the Court sought, to a degree, to preserve a constitutional basis for American democracy.
Testing the limits of the delegation of emergency authority, using tariffs to close America’s northern and southern borders to normal trade, presents an entirely novel question.
When it comes to taxing imports through tariffs, it is crystal clear that in the Constitution this power is given by our nation’s founders to Congress, not the president. Modern exceptions to exclusive congressional exercise of this power have grown through delegations by the Congress and that is the case when a national emergency is encountered, when quick action is essential. The IEEPA, enacted 58 years ago, contains virtually unlimited powers to regulate international transactions if the statutory criteria are met. They are, basically, that the authority is granted “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat” and “…may not be exercised for any other purpose."
Declarations of national emergencies have not proven to be as rare as one might expect. Some 70 of them have been declared since 1977, dealing with everything from hostile acts by the government of Iran or terrorist groups like Hamas to public health in the case of COVID-19 and natural disasters such as Hurricane Katrina. The majority of these national emergencies are still in effect, even though Congress tried to provide for cancellation by facilitating a vote of either chamber. However, the Supreme Court held as a general proposition that override by one congressional chamber was unconstitutional, so current law provides for ending a declaration of national emergency by a vote by Joint Resolution requiring action by both the Senate and the House of Representatives and signature by the president.
There is now a substantial record of congressional and judicial acquiescence in the use of national emergency authority. Whether this extends to the courts approving these tariffs used to coerce the behavior of foreign governments, of friends and neighbors, Canada and Mexico, remains to be seen.
Clearly the use of tariffs for this purpose is only the beginning of what Trump contemplates. He made it plain that he plans to use tariffs against other countries to attain other objectives. The genius of Madisonian democracy has been a balance of power among the branches of government. To preserve this balance, Congress may choose to express itself as to the limits of deference to the executive as it did recently in a case involving payment for government monitors who examine fish catches aboard commercial fishing boats. It may explicitly approve the president’s actions, removing the courts from any role. Or the courts may decide that this amount of tariff authority cannot be delegated, that a narrower delegation is needed. The courts can also find that the president acted properly within delegated authority.
As for the international trading rules constraining national behavior of any World Trade Organization (WTO) member acting in pursuit of its “national security” interest, we may find in the case of the planned US tariffs, as well as the Canadian and Mexican retaliatory measures, that international trade agreement disciplines, under the WTO or free trade agreements, have become a thing of the past.
Note
1. This blog does not examine the legal authority for the additional 10 percent tariff applied to products from China, as the original tariffs that Trump imposed on China during his first term and President Joseph Biden continued have not been removed by either the courts or the Congress, and this latest action raises no new legally differentiable issues.
Data Disclosure
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