President Trump’s tariffs v. the Supreme Court’s duties

Major Questions is a recurring series by Adam White, which analyzes the court’s approach to administrative law, agencies, and the lower courts.

When President Donald Trump announced a new era of tariffs in his “Liberation Day” event, he singlehandedly created a new era of American economic policy and temporarily crashed global markets. The president himself declared it “one of the most important days, in my opinion, in American history.” 

Since then, markets have recovered, and we’ve grown accustomed – maybe numb – to the spectacle of a president constantly making, unmaking, and remaking tariffs in response to everything from Chinese negotiations to Canadian TV commercials. 

But when those tariffs reach the Supreme Court on Nov. 5 in Learning Resources v. Trump, these controversies will be just background for a very specific legal question: Does the president’s statutory power to “regulate” imports include the power to tax them?

In the International Emergency Economic Powers Act of 1977 – or IEEPA for short – Congress gave presidents sweeping powers to deal with any “unusual and extraordinary threat with respect to which a national emergency has been declared.” Specifically, when the president declares such an emergency, he then has the power to (among other things) “investigate,” “regulate,” or “prohibit” imports. The word “tariff” or “tax” does not appear in the statute, but the administration argues that the president’s power to “regulate” such trade includes the power to impose tariffs on it.

One might be tempted, at first glance, to simply shrug off the administration’s argument that a tariff is a “regulat[ion].” After all, the Constitution plainly distinguishes between the power to “regulate” international trade and the power to impose “[t]axes, [d]uties, [i]mposts and [e]xcises” on it.

But the case is somewhat more complicated than that. First, as law professor Jack Goldsmith has emphasized, a federal court held 50 years ago that an earlier statute’s power to “regulate” trade supported President Richard Nixon’s own tariffs. (The court was the U.S. Court of Customs and Patent Appeals, which was abolished in 1982 and succeeded by the U.S. Court of Appeals for the Federal Circuit; the statute was the Trading with the Enemy Act of 1917, which was succeeded in 1977 by IEEPA.) 

And second, as law professor Chad Squitieri has documented, many early constitutional statesmen – including James Madison and John Marshall – spoke generally of tariffs (“duties”) as a means to “regulate” commerce. In the 1824 case of Gibbons v. Ogden, for example, then-Chief Justice John Marshall alluded to “the right to regulate commerce, even by the imposition of duties.” To be sure, Marshall emphasized that the Constitution itself distinguishes the two powers: “the power to regulate commerce” is “entirely distinct from the right to levy taxes and imposts,” he wrote. But Squitieri’s point, illustrated by the first Marshall quote and many others, is that it is at least possible for other legal documents, including statutes, to treat “regulate” and “tariff” as synonymous.

And finally, as law professor Jonathan Adler has noted, if IEEPA’s meaning is unclear, then perhaps the court will give the president a measure of deference, since courts often defer to the executive on questions of foreign policy and national security, of which tariffs are frequently a tool.

Without trying to exhaust all of the arguments on both sides of the issue, let me offer a few points worth watching for in Wednesday’s oral arguments. And, as it happens, Adler’s point is a good place to start.

Is this a case about diplomatic powers or Congress’ “power of the purse”? 

When it comes to diplomatic and national security powers, the court often defers to the president “as the sole organ of the federal government in the field of international relations.” If justices see the Trump tariffs as mainly a matter of foreign policy, and if they see IEEPA’s “regulate” provision as ambiguous, then perhaps they will give substantial deference to the president’s interpretation.

Then again, another way to see this case would be, first and foremost, as a case about Congress’ “power of the purse.” As we have seen in recent cases involving the Consumer Financial Protection Bureau and the Federal Communications Commission, Congress can delegate substantial fiscal power to the executive branch. (In CFPB v. Community Financial Services Association, it was perpetual funding from the Federal Reserve to the CFPB; in FCC v. Consumers’ Research, it was the power to impose fees on the telecommunications services industry.) Yet Trump’s highly publicized approach to tariffs may give the justices pause. The sheer enormity of many of these new taxes, the erratic changes he makes to them, their immediate effects on U.S. companies and consumers, and his repeated identification of tariffs as revenue for domestic policy programs make this at least as much a matter of domestic policy as it is a matter of foreign policy. 

Perhaps the concerns that Justice Neil Gorsuch, joined by Justices Clarence Thomas and Samuel Alito, pressed in his Consumers’ Research dissent will be all the more salient for these tariffs: “Taxation ranks among the government’s greatest powers. Indeed, it is arguably the federal government’s ‘most important . . . authorit[y],’” he wrote (quoting Alexander Hamilton), which is why “all legislation ‘for raising Revenue’ must ‘originate in the House of Representatives[.]’” Congress already has ceded enormous power to presidents, they warned, and “by approving a delegation of Congress’s taxing power unprecedented in this Court’s history, we risk making matters worse yet.” 

In Federalist No. 58, Madison wrote that Congress’ “power of the purse” is our Constitution’s “powerful instrument” for constraining “the overgrown prerogatives of the other branches of the government.” Today, it is hard to imagine a more “overgrown” prerogative than Trump’s own prerogative to influence U.S. and foreign companies through tariffs. Perhaps in this case the court will therefore focus not just on the president’s diplomatic powers, but also on Congress’ power of the purse – and the constitutional relationships between the two. If so, then they will likely be much less deferential to Trump’s interpretation of the law.

Do we read IEEPA in light of an old lower-court case – or in light of other statutes?

As noted above, the late U.S. Court of Customs and Patent Appeals held in the 1975 case of United States. v. Yoshida International that the president’s power to regulate trade, under the late Trading with the Enemy Act, included a power to impose tariffs. At least one line in IEEPA’s own legislative history refers to the Yoshida case, and the Supreme Court has suggested that IEEPA gives presidents “essentially the same authorities” as TWEA did.

Yet those might be two extremely thin reeds for supporting Trump’s broad assertions of power – a single line in a House Report that mentions Yoshida but stops far short of wholly endorsing its treatment of tariffs as a proper way to “regulate” imports; and a single line in a Supreme Court case that had nothing to do with tariffs, let alone tariffs on a scale approaching Trump’s never-ending “Liberation Day.” 

Perhaps instead the court will see relevance in the other statutes that explicitly give presidents the power to impose tariffs – such as Section 301 of the Trade Act of 1974, which empowers the president to “impose duties or other import restrictions” in certain circumstances, pursuant to major procedural requirements. Or, for that matter, Section 122 of the 1974 Act, which empowers the president to impose temporary “duties” on imports (but only up to 15 percent proportionately) “to deal with large and serious United States balance-of-payments deficits.” Congress clearly knows how to delegate tariff powers to a president when it wants to, and it did so repeatedly, just a few years before IEEPA. The absence of an explicit grant of tariff power in IEEPA, by contrast, should counsel against inferring such a power.

Does Trump’s “emergency” declaration matter?

I think it does, but not in the way that many might assume. Many of the tariffs’ critics dispute the factual notion that this is an “emergency” at all, and thus urge the court to second-guess Trump’s declaration that trade deficits now qualify as a national emergency. Could longstanding trade deficits actually qualify (per IEEPA) as an “unusual and extraordinary threat” to national security? Should the court review Trump’s factual judgment here?

The administration takes this argument seriously enough to respond, arguing that the president’s finding of an emergency is completely unreviewable: “the President’s determinations in this area are not amenable to judicial review,” because judges “lack the institutional competence to determine when foreign affairs pose an unusual and extraordinary threat that requires an emergency response.”

The DOJ may well be right. Perhaps the courts can’t review the fact of a presidentially declared emergency. But if anything, that argument may cut against the administration’s interpretation of IEEPA’s substantive power to “regulate.” 

That is: If a president’s emergency declaration is actually unreviewable, then the substantive stakes of such a declaration are even more enormous. The more that courts defer to the president’s factual finding, the more that courts may need to be skeptical of a president’s sweeping claims of power that would be unlocked by his unilateral declaration.

And that leads me to another question:

Do Trump’s tariffs present a “major question”? 

In recent cases involving policy initiatives by Democratic presidents – such as the EPA’s Clean Power Plan, OSHA’s COVID-19 vaccine mandate, the Education Department’s student loan waivers, and the CDC’s COVID-19 eviction moratorium – the Supreme Court has taken a very skeptical view of an administration’s sudden discovery of unprecedented powers in an old statute’s ambiguities. This is the “major questions doctrine,” a rule of judicial skepticism that the court summarized in West Virginia v. EPA: “‘In extraordinary cases … there may be reason to hesitate’ before accepting a reading of a statute that would, under more ‘ordinary’ circumstances, be upheld. Or, as we put it more recently, we ‘typically greet assertions of extravagant statutory power over the national economy’ with ‘skepticism.’” 

Do Trump’s sweeping assertions of enormous power over global trade – a power to unilaterally make, unmake, and remake tariffs on little more than whims, based on a completely unreviewable presidential declaration of emergency – constitute a “major question”?

To ask the question practically answers it. Still, some make reasonable arguments that the technical requirements of the major questions doctrine do not apply to these tariffs. 

The Trump administration, for example, argues that the major questions doctrine applies only to agencies’ interpretations of statutes, not to the president’s. That is a strange argument to be made by an administration that contends elsewhere that all regulatory agencies, including those involved in the court’s prior major questions doctrine cases, are subject to the president’s control – a doctrine known as the “unitary executive theory” – and agencies cannot make legal interpretations different from the president’s. 

Then again, the administration’s lawyers are correct that the previous cases involved agency rules, not the president’s own orders, and thus the present case on IEEPA tariffs would be a novel application of the major questions doctrine. Nevertheless, the major questions doctrine is a doctrine about interpreting statutes, not about reviewing agencies per se. I think the administration is putting far too much weight on the nominal distinction between a president and his agencies (which it certainly doesn’t do in other contexts).

The Justice Department’s brief also argues that the major questions doctrine “has not been applied by th[e] Court in the national security or foreign policy contexts, because the canon does not reflect ordinary congressional intent in those areas.” Here the administration is quoting Justice Brett Kavanaugh’s concurrence in FCC v. Consumers’ Research, and the point is again a reasonable one. (Curtis Bradley and Goldsmith have written at length on the major questions doctrine’s ill fit for foreign policy and national security questions, where the president has “independent powers.”)

But this argument again begs the basic framing question: Is this simply a “foreign policy” or “national security” case, or is it also a case about Congress’ own power of the purse? Presidents have significant, independent constitutional powers in foreign policy and national security, as Justice Robert Jackson emphasized in the seminal steel seizure case; that much has long been clear. But equally clear is the fact that a president’s inherent constitutional powers do not include a power to tax. Such a power can only come from Congress. And none of the president’s genuinely independent powers in international affairs come close to the broad power to raise hundreds of billions of dollars in presidential revenues.

Kavanaugh’s question in FCC v. Consumers’ Research, then, is a good one: For these tariffs, should the court presume that Congress tends to delegate sweeping powers to presidents, or should the court guard against the risk that a president would take legislative powers that Congress never actually gave to him?

Finally, some may argue that the major questions doctrine doesn’t apply here at all, because imposing tariffs under IEEPA is not “novel” – after all, President Richard Nixon once did it. (Hence the aforementioned Yoshida case.) 

Indeed, the court’s recent major questions cases often speak in terms of a program’s “novelty.” But Trump’s tariffs so far outpace Nixon’s that it is not hard to call them “novel.” If anything, the difference in magnitude calls to mind the court’s discussion of novelty in one of the recent major questions cases: Biden v. Nebraska, on the Biden administration’s student loan waiver program.

There, the court acknowledged that the Education Department had waived loans before. But, the court noted, “past waivers and modifications issued under the Act have been extremely modest and narrow in scope,” and the agency had “never previously claimed powers of this magnitude under” the relevant law. 

The student loan case quoted another recent major questions case, on the CDC’s COVID-19 eviction moratorium: “This claim of expansive authority under [the Public Health Service Act] is unprecedented. Since that provision’s enactment in 1944, no regulation premised on it has even begun to approach the size or scope of the eviction moratorium.” So, too, with Trump’s tariffs – by his own boasting, and plain to see by anyone watching the last year play out, the “Liberation Day” tariffs are an unprecedented application of IEEPA. If singlehanded control of international trade is not a major question, then what is?

In the end, however, arguments over the technical application of a major questions doctrine may simply be a red herring. Whether or not the court explicitly invokes the major questions doctrine by name, or if it simply undertakes its own best reading of IEEPA’s use of the term “regulate” with a measure of skepticism toward Trump’s unprecedented claims of power, the sheer magnitude of power claimed by the president, and its practical effects, should give it pause.

If the court rules against the Trump administration, then what will change going forward – or looking backward? 

If the court rejects the Trump administration’s interpretation of IEEPA – which I think it likely will, for all the reasons sketched out above – then the specific legal question will be settled going forward. The Trump administration will not be able to invoke IEEPA as a basis for future tariffs. But beyond that, much would still be left undecided.

First, looking backward to tariffs that already have been paid, a ruling against the Trump administration would not necessarily answer the question of whether the nation must pay them back. In fact, I find it unlikely that the court would reach such a question, at least in this round of litigation. 

Rather, the refund issue strikes me as the kind of factual and legal question that the court would send back to the lower courts. Perhaps the U.S. Court of Federal Claims (which handles this kind of litigation) will have to decide in the first instance whether refunds must be paid – and if so, how parties should go about seeking repayment. U.S. companies who already paid tariffs will need to play out the entire legal process in the Court of Federal Claims and subsequent appeals; some or even many of them may make a prudential judgment not to litigate their already sunk costs. As for foreign companies: Perhaps further negotiations between the White House and foreign countries will settle the question country by country, on a “voluntary” basis, with the administration pushing other countries to effectively pay refunds to their own companies. In any event, the refund question and its future contingencies go well beyond the questions currently before the court; as Chief Justice John Roberts once noted, “If it is not necessary to decide more to dispose of a case, then it is necessary not to decide more.”

And second, looking forward, a ruling against the Trump administration may have less of an effect than it seems. Even if the administration cannot invoke IEEPA for future tariffs, it could try to rely on the (albeit more limited) Section 301 tariff statute and other laws. Or, more bluntly, Trump could continue tariff negotiations without explicit reference to any statute, and frame the countries’ agreements as “voluntary” payments to the United States.

This might seem disappointing, but then again it might be reassuring. Learning Resources v. Trump is not necessarily a cataclysmic fight over Trump’s tariffs writ large. Rather, it is a case about one statute’s words. The court’s duty is to say what the law is in this particular case. The rest can be left to politics, and to future cases.