Trump’s tariffs: Turfed out but raring to return
The US Court of International Trade struck down America’s ‘reciprocal’ tariffs for exceeding the president’s authority. As the legal battle over their validity thickens, could the rule of law in the US come to the global economy’s rescue?
In a move that sets back US President Donald Trump’s idiosyncratic plan to make America ‘great again,’ but could possibly slow down or arrest America’s descent as a democracy, a court has ruled against the ‘reciprocal’ tariffs announced by him on 2 April, dubbed ‘Liberation Day.’
The power to levy such tariffs is held by the US Congress rather than its president, ruled the court, giving the White House 10 days to reverse import duties announced under the International Economic Emergency Powers Act (IEEPA).
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While this law grants the president power to ‘regulate’ imports, it does not mention ‘tariffs.’ Given the significance of these tariff measures and their ‘unbounded’ nature, the court held as invalid the assumed delegation of Congress authority to the White House under that law. In other words, the tariff orders had exceeded his authority.
US stock market index futures jumped after the ruling, but it is premature to conclude that Trump’s tariff tantrums are behind us. This is so for three reasons. One, as the US Court of International Trade’s order is being appealed by the administration, it could be overturned either by a federal appeals court or the Supreme Court. Two, Trump’s team might look for another statute to back his trade barriers. And, three, he could try pressuring lawmakers to enact his agenda and thereby secure it from judicial interdiction.
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Although aimed at external threats, the IEEPA adopted in 1977 was partly designed to curb and specify the emergency powers granted to the US president under prior laws like its Trading with the Enemy Act of 1917, which had been used by presidents to assume sweeping authority. In 1973, a Senate investigation had found various emergencies declared since 1933 still in force, which led to legislative efforts to constrain the White House.
The IEEPA has hitherto been used to slam hostile countries with sanctions and confiscate foreign assets. Trump has been the first US leader to use this law to erect steep trade barriers against countries alleged to have put the country at threat by selling it more goods than buying US wares.
Of the three judges who unanimously ruled against tariffs under the IEEPA, one had been appointed by Trump himself, a second by Obama and the senior-most by Reagan. It is difficult to pin their opinion on any partisan bias.
The court also struck down tariffs imposed on countries for their alleged role in America’s opioid crisis, citing a weak link between this action and its ability to deal with this declared emergency, but did not invalidate America’s 25% duty on steel, aluminium, automobiles and auto parts levied under the US Trade Expansion Act. Under this law, tariffs can be imposed if the commerce secretary determines that specified imports threaten national security.
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It is conceivable that the Trump administration will seek to invoke such laws to re-impose levies should its appeal be rejected. However, it might be difficult to argue that garments from Asia pose a threat while clothes from Mexico do not. The win-win economic logic of trade should also make it hard to cast imports from specific countries as perilous, although political postures that feed on economic anxieties can colour popular views of what is good or bad for a country.
Whichever way the legal battle goes, this week’s court order on tariffs can be taken as a win for due process, even if uncertainty and volatility persist. Global growth is still at risk. Yet, at least on paper, an institutional commitment to the rule of law could relieve the world.
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