Are the Trump Tariffs Even Legal?

 With all the attention to the harm that the Tariffs will cause the US and Global economies, there has been little discussion on an important question: is Trump even authorized to impose such massive tariffs?  There is actually a strong legal case that the tariffs are not authorized, and there is already one legal challenge to the initial round of tariffs on Canada, Mexico and the U.S.

There is a complicated set of laws governing the President's authority to issue tariffs.  This not an area of my expertise so I won't pretend to summarize these laws.  (But we do have great trade lawyers at Arnold & Porter if you are looking for great legal counsel!).  Suffice it to say that these trade laws allow the President to impose tariffs on certain industries using a list of particular  criteria and only after a process is followed.

Trump, however, did not exercise any of these trade authorities in imposing his tariffs--either in the first round or in this week's  tariffs.  Instead he relied on the International Emergency Economic Powers Act (which all the cool kids call IEEPA) , which I do address in my practice.  IEEPA is the basis of much of our sanctions on other countries.  It allows the President to address unusual and extraordinary threats by declaring a national emergency, and authorizes the President to prohibit or regulate, among other things,  "any transactions in foreign exchange" and "importation and exportation" of any property of a foreign national.  

As I said, IEEPA is the law authorizing sanctions on countries and foreign individuals.  Until this year, it has never been used to impose tariffs.  To be fair, President Nixon did impose a 10% supplemental duty on all imports in order to address a currency crisis in 1971 under IEEPA's predecessor statue (Trading With the Enemy Act), and the Custom's Court upheld that duty.  The case upholding these tariffs, however, adopted some limits on this authority.  In particular, the court said that the Trading With the Enemy Act was “limited to articles which had been the subject of prior tariff concessions” and did not “tear down or supplant the entire tariff scheme of Congress.” 

The key legal issue, therefore, will be whether the admittedly broad language of IEEPA and the use of the Trading With the Enemy Act to impose a a tariff surcharge in 1971 gives the Trump Administration sufficient authority to impose massive tariffs on the entire world.  I think there is serious doubt that the courts would answer yes.

Critical to this issue is the U.S. Supreme Court's recent decision in West Virginia v. EPA, where the court said that where there is something extraordinary about the “history and breadth of the authority” an agency asserts or the “economic and political significance” of that assertion, courts should “hesitate before concluding that Congress meant to confer such authority."  In that case, the Court applied this principle to reject the EPA's claim for authority over an issue of "vast economic and political significance" where Congress has not clearly empowered the agency with power over the issue.  During the Biden Administration, the Court used this doctrine to strike down several claims of authority--most notably in striking down the Biden Administration's plan to forgive student loans.

It is not difficult to make the case that the extraordinary Trump tariffs--imposing a massive increase in tariffs globally-- is of vast economic and political significance and there is little evidence that Congress clearly gave such sweeping authority in IEPPA.  While Nixon imposed a tariff surcharge under the Trading With the Enemy Act, this surcharge acted within the  normal tariff framework at the time.  The Trump tariffs tear down the existing structure and impose the highest tariffs in U.S. history without any hint of Congressional action.

I think that a fair reading of IEPPA is that modest tariffs directed to particular countries is an authorized sanction in the President's tool box, but there is nothing in the legislative history of the Act that Congress intended the President to use IEEPA to ignore the Trade Law framework, and impose another framework altogether.  Simply put, there is no evidence that Congress intended to completely cede its constitutional power over tariffs to the President.

It will be interesting to watch the courts address the first legal challenge to the tariffs--and to see if other businesses and business groups have the courage to challenge the tariffs as well.  I also wonder with the Democratic Attorney Generals might have standing (since their States are major consumers of goods subject to the new tariffs) to challenge the tariffs as well.  There are many other potential legal arguments available to these potential plaintiffs, but I think the "major questions" line of cases is the most fruitful avenue of attack.