Trump still asserts the power to impose any tariff he wants on any country he chooses, at any time, for any reason

Three judges of the US Court of International Trade (USCIT) held that most of the tariffs imposed by President Donald Trump were unlawful and struck them down.

Trump immediately appealed and applied for a stay of the order of USCIT. This was granted and temporarily reinstates the tariffs pending appeal, which is fair enough given the worldwide implications of the appeal’s outcome; it is not however an indication of the appeal’s prospects of success.

The judgement was handed down last Wednesday and is relatively short although not easy to follow as it is in American legalese. In a nutshell the case turned on the fact that under the American constitution all forms of taxation including the imposition of tariffs are assigned exclusively to the legislature – the Congress comprising the House of Representatives and the Senate.

The whole point of the American Revolution in the 18th century was independence from the British king and his parliament to enable the American colonists to set up their own legislature and pass their own tax and tariff laws instead of having them imposed by the British parliament in which they were not represented.

“No taxation without representation” was the slogan that inspired the Sons of Liberty who launched the American Revolution in 1773 known as the Boston Tea Party. This was not as an American history master jokingly told his class at the American Academy in Larnaca on being asked what the Boston Tea Party was and replied “I guess they had a party and they drank some tea.”

What happened was that a British ship’s cargo of tea was spilled into Boston harbour in Massachusetts in protest against the British import tax on tea that was deliberately retained by Britain to assert its sovereignty over its American colony.

Taxes and tariffs have been a legislative matter par excellence both for the English Parliament and for Congress in America. If government is going to tax people, it can only do so by legislation and not executive action.

Paraphrasing from the judgement, the powers that belong to Congress should not be directly or completely taken over by the president who executes policies contained in legislation passed by Congress, which he can initiate or veto in accordance with the American constitution’s famous checks and balances.  

In its judgement last week the court set the parameters between Congress and the executive in which it held President Trump’s executive orders imposing tariffs on friend and foe worldwide were unlawful. There were two sets of tariffs: the Worldwide Retaliatory Tariffs that were done to improve trade imbalances by an allegedly gullible America and the Trafficking Tariffs to protect America from drugs trafficking from Canada, Mexico and China.

The court began its judgement by stating the broad constitutional principle that although “Congress may not transfer to another branch powers which are strictly and exclusively legislative, Congress may confer substantial discretion to implement and enforce the laws.” As observed earlier, taxes and tariffs are quintessentially legislative but Congress has passed section 122 of the Trade Act 1974 that delegates to the president a limited power to impose tariffs in order to deal with trade imbalances and trade deficits – Trump’s complaint about China and the EU.

Congress also conferred on the president the power to levy tariffs under the International Emergency Economic Powers Act 1977 (IEEPA) which was the power Trump used. But he must have known that this power to impose tariffs could only be used to deal with unusual and extraordinary threats that required the president to notify Congress of a national emergency. As the court observed the power delegated to the president was not a carte blanche to usurp the function of Congress unconstrained by the separation of powers on which the American constitution is based.

Trump thought and still thinks that he was elected to impose tariffs as he promised during his election campaign and that he is therefore entitled to ignore constitutional constraints and blames ‘rogue unelected judges’ for frustrating the will of the people – an unfair criticism that disrespects the separation of powers.  

What the court had to determine was whether the president’s actions fell within delegated authority, whether the statutory language was properly construed and whether it conformed with procedural requirements.

The president has the statutory power to declare a national emergency and had done so by executive order. The court however was entitled to look into whether objectively the tariffs were being imposed “to deal with unusual and extraordinary threats”.

The facts were not in dispute and the question was whether Trump recognised the limitations Congress had imposed on the powers it delegated to him. Such legislative acts lay down an “intelligible principle” which must “meaningfully constrain” the president, given that taxes and tariffs are legislative acts exclusively assigned to Congress.  

Also when a statute passed by Congress delegates to the president wide economic and political powers the court will stand back and pause before concluding that Congress clearly intended to delegate such wide powers to the president. President Trump asserted and still asserts the power to impose any tariff he wants on any country he chooses at any time for any reason. The court disagreed. It held that IEEPA 1977 could not have delegated to the president unlimited tariff authority because that would be unconstitutional

In conclusion the court held that in passing the International Emergency Economic Powers Act 1977 Congress did not authorise any of the Worldwide Retaliatory and Trafficking Tariff orders.

The first because the orders exceed the authority granted to the president, not least because the proper statute to deal with trade imbalances is the Trade Act 1974. The second because the tariffs did not deal with the threats identified in the orders – imposing tariffs does not deal with drug smuggling.

Alper Ali Riza is a king’s counsel in the UK and a former part time judge