Trump’s tariff blitz faces strong legal challenges

WITH MARKETS gyrating from the tariffs Donald Trump has imposed on around 180 countries, only to pause some of the most punishing ones on April 9th, a conservative organisation has filed a lawsuit challenging an initial round of tariffs the president announced on Chinese imports in February, duties he has since escalated. The New Civil Liberties Alliance (NCLA), which counts Charles Koch, a right-wing billionaire, among its supporters, argues that the president lacked the authority to impose these levies. With Chinese goods still a prime target, the case retains its salience. Similar lawsuits against other tariffs could yet scuttle the boldest—and most destabilising—move of Mr Trump’s second term.

The power “to lay and collect taxes, duties, imposts and excises”, per Article 1, section 8 of the constitution, lies with Congress. The constitution assigns no direct role to presidents in this domain. In 1977, however, Congress passed the International Emergency Economic Powers Act (IEEPA) in an attempt to curb powers granted to the president during the first world war. This law empowered presidents to restrict imports, freeze assets and impose sanctions in the event of an “unusual and extraordinary threat” to the “national security, foreign policy or economy of the United States”. Mr Trump invoked the IEEPA in February, pointing to the influx of fentanyl, to justify tariff hikes on Canada, Mexico and China. He did so again on April 2nd to support his radical tariff overhaul, declaring that America’s “large and persistent” trade deficits threaten the nation’s security and economic stability.

The NCLA’s lawsuit, filed in Florida on April 3rd, does not quarrel with Mr Trump’s declaration of a national emergency concerning fentanyl. But it argues that the IEEPA “does not even mention tariffs” and notes that “no previous president” has turned to the statute to introduce tariffs in its nearly five-decade history. Even if tariffs were authorised, the law requires measures to be “necessary” to resolve the emergency, yet there is “no connection between the opioid problem and the tariff he ordered”. The lawsuit also claims that “Congress passed the IEEPA to counter external emergencies, not to grant presidents a blank cheque to write domestic economic policy”.

In 2023 the Supreme Court balked when Joe Biden stretched statutory language to relieve $430bn in student loans. The loan forgiveness triggered the “major questions doctrine”—the idea that when an executive action involves a question of vast “economic and political significance”, it requires clear and specific authorisation from Congress. The NCLA draws on the same doctrine to condemn Mr Trump’s first round of tariffs, calling them “the largest tax increase in a generation”.

If the fentanyl tariffs on China raised a major question, reckons Alan Morrison, a law professor at George Washington University, sweeping levies of the type announced by Mr Trump on April 2nd pose a “cataclysmic” one. Asserting presidential authority to upend the global trading system, he argues, “blows the sky off the statute”. And the haphazard details—seemingly picking numbers out of a hat, penalising an island inhabited only by penguins, exempting Russia, starting and stopping—suggests Mr Trump’s approach to tariffs “could hardly be more of an ‘I can do what I want to do.’”.

Mr Morrison highlights another legal tool that could be turned against Mr Trump: the “non-delegation doctrine”, which holds that Congress cannot just hand over its legislative powers by granting excessive authority to the executive. If the Supreme Court were to accept Mr Trump’s expansive reading of the IEEPA, it might be forced to strike down the statute as an unconstitutional delegation of Congress’s power over tariffs.

If that argument were to prevail, then Mr Trump’s executive order lays out something of a plan B. In addition to the IEEPA, it briefly cites three laws as alternative sources of tariff authority. The National Emergency Act allows presidents to activate emergency powers embedded in other laws. Section 604 of the Trade Act of 1974 permits them to adjust tariff schedules within limits set by Congress. And section 301 of Title 3 of the US Code allows presidents to delegate powers to cabinet members. Yet none of these appears to grant the sweeping tariff powers Mr Trump asserts.

If Mr Trump sticks with punishing tariffs against countries or industries, the pool of potential plaintiffs to take this fight to the courts is vast. Many companies in America stand to suffer. But Nicholas Bagley, a law professor at the University of Michigan, wonders if giant corporations like Walmart and Nike will “pick a high-profile fight with the president on one of his signature policy objectives”. Trade groups like the American Petroleum Institute, he reckons, may be more willing to sue in the event tariffs are switched on again in 90 days, as may “scrappy, right-wing property-rights-oriented NGOs”.

What happens when this fight reaches the Supreme Court? That, says Mr Bagley, is tricky to predict. On one hand, the justices tend to defer to presidents on policies “with a foreign-affairs connection”. On the other, the Roberts court tends to be pro-business and its conservative majority favours a “limited, constrained administrative state that will clash with Mr Trump’s muscular use” of the law, Mr Bagley notes.

There are other wrinkles. If a banana importer successfully challenges a tariff on bananas from Costa Rica, courts will not issue a blanket order cancelling Mr Trump’s entire tariff regime. (Ilya Somin, a law professor at George Mason University, says a lawsuit he is preparing with the Liberty Justice Centre, a right-wing legal advocacy organisation, will seek relief against “the entire invocation of the IEEPA to impose tariffs, not just those against particular nations”.) Ordinarily, the government would withdraw tariff hikes across the board if the Supreme Court rules that it lacks the authority to undertake them. But “that voluntary respect” for the rule of law, Mr Bagley says, “seems very much open to question.”

Some conservative activists say they are unimpressed by the April 9th announcement of a 90-day delay to pursue negotiations with dozens of countries, as it does not alter the constitutional issues. “Ten percent tariffs for nearly the whole world are still in effect without pause,” notes Mr Somin. “Absolutely moving ahead!” ■

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