Understanding the Legal Case Against President Trump’s “Liberation Day” Tariffs

Trumps' Tariffs Face a Day of Reckoning in Court

Guest Post by Dr. Caleb Petitt

President Trump unilaterally imposed his “Liberation Day” tariffs on April 2nd. The tariffs sent the stock market into a spiral and sparked economic uncertainty. Tariff rates have fluctuated wildly ever since they were imposed. The tariffs have been (predictably) bad for the economy and have faced a number of legal challenges.

Those legal challenges faced by the Trump administration are soon coming to a head. After the Trump administration implemented its tariffs, V.O.S. Selections Inc. filed a lawsuit claiming the tariffs were unconstitutional, and on May 28 the three judges on the panel for the United States Court of International Trade declared the tariffs unconstitutional. The Trump administration appealed the case, so tomorrow — July 31 — the U.S. Court of Appeals for the Federal Circuit will hear the lawsuit V.O.S. Selections, Inc. v. Donald J. Trump to determine if the tariffs are constitutional.

A number of think tanks have submitted amicus briefs to weigh in on the case. An amicus brief is a document provided by parties not involved in a case but who can provide information or perspective to help the court make its decision. Four amicus briefs have been filed to demonstrate the tariffs are unconstitutional, with each brief providing a unique perspective to make its point. Combined, these briefs present a picture of the arguments that will be used to argue that the “Liberation Day” tariffs are unconstitutional.

Advancing American Freedom Brief

The Advancing American Freedom brief focuses on how the Trump administration’s interpretation of the International Emergency Economic Powers Act (IEEPA), the law used to justify the tariffs, is in violation of the nondelegation doctrine. The nondelegation doctrine asserts that Congress does not have the authority to delegate its legislative powers to other branches of government.

The nondelegation doctrine in a foundational principle in the American legal system. Even before America was founded, John Locke was arguing that the legislative branch of government could not delegate its legislative powers to other branches of government because the legislative branch holds such power as a delegated power from the people. James Madison also affirmed the nondelegation doctrine, as did Thomas Jefferson, and has been upheld by the Supreme Court since the 18th century.

The original meaning of the Constitution rules out the delegation of Congress’s power to implement tariffs. Both the powers of taxation and of regulating foreign commerce are constitutionally defined as belonging to the legislature, so regardless of whether tariffs are viewed as taxes or as commercial regulation, they are under the authority of the legislature, not the executive.

The Trump administration has also argued that “what constitutes an ‘extraordinary and unusual threat’ and whether a particular action will effectively ‘deal with’ that threat” contains “no basis for meaningful judicial review of President Trump’s findings,” which is actually a self-defeating argument. In order to avoid violating the nondelegation doctrine, Congress must lay down an “intelligible principle” to guide executive decision making so that Congress does not improperly delegate its power. If there was no meaningful basis for judicial review of President Trump’s findings, then the President’s actions would violate the intelligible principle test. On the other hand, if the President’s actions are following an intelligible principle as outlined in IEEPA, the courts can determine if the President’s actions follow from that intelligible principle.

Cato Institute Brief

The Cato Institute brief also emphasizes the historical and legal importance of the nondelegation doctrine and its relevance to the President’s novel interpretation of IEEPA, and comes to the same conclusion as the Advancing American Freedom brief.

The Cato Institute goes on to show that IEEPA does give the President the authority to adjust tariff rates. Congress has issued acts that have granted Presidents limited authority to adjust tariff rates, such as the Tariff Act of 1922, the Trade Act of 1974, and the Trade Expansion Act of 1962. All such acts use the terms “duty,” “duties,” or “tariffs” when conferring that authority, and those terms are absent in IEEPA.

It is truly a novel idea that IEEPA grants the President the authority to impose tariffs. IEEPA has also never been used by a President to impose tariffs. Further, IEEPA was passed to curb executive authority regarding international trade, not to expand it. IEEPA replaced the Trading with the Enemy Act of 1917, which granted the President significant powers to regulate international trade and transactions. Much of the power conferred by the Trading with the Enemy Act developed from interpretations of the act under FDR, who used it to limit private domestic gold holding and to censor international communications.

In short, the Cato Institute found that the President’s interpretation of IEEPA violates the nondelegation doctrine and the clear meaning of the text in IEEPA.

American Enterprise Institute Brief

President Trump has cited two national emergencies to authorize his action of implementing tariffs under IEEPA: a crisis of fentanyl crossing the border via Mexico, Canada, and China, and a crisis of persistent trade deficits. The American Enterprise Institute Brief takes issue with justifying President Trump’s tariffs under IEEPA by calling American trade imbalances a national emergency because trade deficits are not “unusual and extraordinary,” are not a threat to American security, and the tariffs will not change the trade imbalance.

First, IEEPA grants the President the authority to “regulate . . . any acquisition . . . importation or exportation of . . . any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States . . . .” in order “to deal with an unusual and extraordinary threat . . . .” and “[can]not be exercised for any other purpose.” America has run persistent deficits for the last 50 years; the presence of trade deficits at this point seems neither unusual nor extraordinary. Bilateral trade deficits are even more ordinary, and therefore serve as a strange basis for an emergency.

Second, trade deficits are not a threat to America, and therefore do not constitute an emergency. Bilateral and sector specific trade deficits are an expected and normal outcome of specialization and the division of labor. While specific bilateral sector deficits could have strategic consequences, there is no reason to think that bilateral deficits in general have any strategic consequences for the United States. There is even less of a case to be made for aggregate trade deficits being an emergency. Economists frequently see America’s aggregate trade deficit as a sign of its strong economy; it indicates that our economy is healthy enough to attract foreign investment.

Third, even if trade deficits constituted an extraordinary emergency, tariffs would not be an effective tool at fighting them. Tariffs reduce imports and exports, and therefore do not have a tendency to affect trade balances. Tariffs reduce trade in general, not trade balances.

Finally, because the tariffs have such large ramifications for the American economy, the major questions doctrine becomes relevant for them, which demands that agencies must point to “clear congressional authorization when they claim the power to make decisions of vast

economic and political significance.” The tariffs clearly are of vast economic significance, and the President cannot point to clear congressional authorization.

Goldwater Institute Brief

The Goldwater Institute brief pulls from the history of executive taxation in England during the American colonial period and the perspectives of the founding fathers to hammer home the importance of the legislature firmly retaining the power to tax. The Stuart kings of England, who taxed England and the colonies without the support of Parliament, started the English Civil War and sparked the Glorious Revolution. One king was beheaded (Charles I), another later one was deposed (James II), and the royally appointed governor of New England (Edmund Andros) was thrown in jail for usurping the legislative right to tax.

In 1774, Parliament closed Boston Harbor to imports and delegated the authority to decide if or when to reopen the harbor, which Thomas Jefferson saw as a step down the road to executive tyranny. When debating the merits of the proposed Constitution of the United States, James Madison claimed that the American President could not easily become a king because “the purse is in the hands of the representatives of the people.” The founding fathers and the Constitution clearly show that the power to impose a tariff is a legislative power and that legislative powers cannot be delegated.

The Goldwater Institute brief also makes claims in agreement with the Advancing American Freedom brief concerning whether IEEPA does, or could, delegate the power to impose tariffs to the executive.

Summary

The nondelegation doctrine is foundational to American constitutional law, and the President’s actions clearly violate it. He has imposed taxes on the American people. He has claimed that it is in keeping with IEEPA, despite being unable to show his conformity to an intelligible principle laid down by Congress. He has broken with all previous interpretation and usage of IEEPA. The emergency he has claimed he is addressing is not unusual or extraordinary, is not a threat to America, and the tariffs he has imposed will not solve the “emergency” he claims to address. His actions break with American law and history. His tariffs expand executive power and impose taxes on the American people. The facts of the case show that President Trump’s tariffs are outside the bounds of constitutional law.

Caleb Petitt is a research associate at the Independent Institute in Oakland, CA @CalebDPetitt