President Donald Trump's use of tariffs have lost repeatedly in the courts—first the president's use of emergency authority was condemned by the Court of International Trade, the Federal Circuit, and the Supreme Court, and second his use of temporary balance of payments authority was rejected by the Court of International Trade. The "third act" of the president's attempt at constructing a tariff wall is proceeding under a claim that the retaliatory authority under Section 301 of the Trade Act of 1974 will authorize reimposition of his "reciprocal tariffs." This assertion of tariff authority is unlikely to survive court challenge, although it is likely to be a closer question than in the last two cases. A separate complication is that this time the use of the chosen statutory authority requires an overt attack on the practices of America's allies and any would-be friends.
For diplomacy, a bitter pill
When it comes to trade, this administration does not treat its allies well, neither long-standing allies (the democracies of Western Europe or Japan, for example) nor budding ones (such as India). It has forced asymmetric trade agreements on most of them. A major holdout had been the European Parliament, but it gave its provisional assent on May 20 to the one-way tariff deal it struck with the US president last summer. It attached a condition—no more random additional US tariffs outside the bilateral agreement. But this is not really the end of this story. The next strategy to impose tariffs is not going to be very palatable for the America's trading partners.
The first two rounds were objectionable enough: the president declaring an emergency under the International Emergency Economic Powers Act (IEEPA) and then a balance of payments "problem" under Section 122 of the Trade Act of 1974, neither of which existed, in order to impose his "reciprocal" tariffs. The third attempt to sustain comprehensive tariffs is even more problematic, but it is necessary if the administration is to implement its part of the deals. The essence of each agreement is that Trump first imposes new tariffs on imported goods and then agrees to reduce them to a residual of 10 or 15 percent. To accomplish this feat, the administration must identify some statutory authority both to impose tariffs and to remit them. For this purpose, it has turned to Section 301 of the 1974 Trade Act, the president's discretionary retaliatory authority. The statute requires only a US accusation followed by a determination that the foreign country has engaged in unreasonable conduct that burdens or restricts US commerce.
Thus, every country entering into a "Turnberry" arrangement—named after the golf course in Scotland where the European Union and the United States first reached agreement—must not only accept an asymmetric arrangement but also submit to the indignity of being formally condemned through a unilateral US finding of wrongdoing. Why? Because absent such a finding, the president lacks authority either to impose broad tariffs or to bargain them away through selective reductions. (One possible exception would arise if the president invoked national security authority under Section 232, although that statute has not yet been used as the principal legal basis for maintaining comprehensive tariffs.)
If the other parties to the deals continue to adhere to them, the principal long-run cost may not fall primarily on them but on the United States itself, whose geopolitical position has long rested in significant part on its alliances and on others who are in sympathy with its objectives—a structure the second Trump administration has been systematically dismantling.
How will the courts likely view this use of Section 301?
A vulnerability of the use of Section 301 to restore the Trump "reciprocal" tariffs is that it will be clear to the courts that this is mainly an attempt once again to transfer the full tariff power from the Congress to the president. The US Constitution places the authority to levy tariffs within the federal government with the Congress not the president. The issue has particular resonance this year, the 250th anniversary of the Declaration of Independence. The experience of the American colonists bears a strong resemblance to the issues now likely to come before the Supreme Court in judging the validity of the Trump Section 301 tariffs. A few years before independence, on December 16, 1773, Massachusetts colonists threw British tea into Boston Harbor to protest the imposition of taxation without representation. When the Constitution was drafted in 1787 and came into force in 1789, it was explicit that the power to impose taxes and tariffs belonged to Congress, except to the narrow and limited extent that it could permissibly delegate it. Virtually unlimited delegations of authority are not permitted. The founders were intimately familiar with English constitutional history when they designed the American system of government. Parliament had secured formal control over taxation in the English Bill of Rights of 1689. Reflecting that tradition, Article I, Section 8 of the Constitution expressly grants the tariff power exclusively to Congress.
The fact that the judges believe that they understand motivations behind an act will not result in its being found to be unconstitutional. Motive alone does not determine constitutionality. Courts will generally turn first to evaluate statutory authority and then the constitutional structure rather than political motivation.
There are two specific questions for the courts to consider with respect to any tariffs imposed under Section 301: Did the Congress delegate to the executive branch within this retaliatory provision the authority to impose comprehensive tariffs? And could the Congress delegate that much authority even if it wanted to? The courts are likely to analyze this issue much as they did in determining that neither the emergency authority under IEEPA nor the balance of payments authority under Section 122 empowered the president to impose sweeping tariffs on nearly all imports from virtually every country. The Court will first look to the language of the statute. The language is clear: It addresses the "act, policies, and practices of a foreign country" using the singular. There is no indication that the Congress meant "one or more, or multiple foreign countries," to be addressed all at once, turning a single shot .22 caliber rifle (the kind I used in rifle club in high school) into an automatic rifle with a high-capacity drum. Nor does alleging a blanket condemnation of all countries having a bilateral trade surplus with the United States obscure the transfer of power. Nor does dressing up each of the 76 cases with multiple additional counts of hostile practices of various kinds. The fact remains: Section 301 cannot be deployed to reach a result that it does not authorize—exercise by the executive branch of the country's full tariff power.
For this reason, sweeping use of retaliatory authority to impose tariffs covering most US imports is unlikely to survive judicial review. This is true notwithstanding the considerable deference courts ordinarily give the president or the US Trade Representative in determining what constitutes "unreasonable" conduct in foreign economic relations. The Constitution assigns the broad tariff power to Congress, not the executive. That body stopped applying tariffs comprehensively after enacting the Smoot-Hawley tariff in 1930, and ever since has rejected doing so as bad policy.
Section 301 must be read in the context of all the other delegations of trade authority to the executive. In each and every case, the delegation comes with specified limits: to implement trade agreements under Trade Promotion Authority (authority not renewed by Presidents Biden or Trump, and, in its latest iterations when it did exist, not authorizing any tariff increase after 1988), for national security (under Section 232 of the Trade Expansion Act of 1962), for safeguard actions under Section 201 of the Trade Act of 1974), to deal with balance of payment problems (Section 122 of the Trade Act of 1974), or to respond to foreign discrimination (Section 338 of the Tariff Act of 1930).[1]
As Justice Gorsuch stated in the IEEPA case, the founders were wise to entrust this authority to the Congress and not the president:
"…most major decisions affecting the rights and responsibilities of the American people (including the duty to pay taxes and tariffs) are funneled through the legislative process for a reason.... [T]he deliberative nature of the legislative process was the whole point of its design. Through that process, the Nation can tap the combined wisdom of the people's elected representatives, not just that of one faction or man. There, deliberation tempers impulse, and compromise hammers disagreements into workable solutions..., allowing ordinary people to plan their lives in ways they cannot when the rules shift from day to day. In all, the legislative process helps ensure each of us has a stake in the laws that govern us and in the Nation's future."
In a republic and a democracy, it is the legislature that is given this power by the people. Mass use of Section 301 will not stand.
Note
1. See Amicus Brief of Carla A. Hills and Alan Wm. Wolff in the IEEPA case.
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