Trump’s authority to impose sweeping tariffs to be put to the test



WASHINGTON — President-elect Donald Trump’s consistent campaign pledge to impose sweeping tariffs on products imported into the U.S. is likely to face stiff challenges in court and potentially pushback from Congress.

Businesses from sneaker companies to high-tech startups have been ramping up plans to push back against Trump’s proposal to impose up to a 20% tariff on all goods imported into the U.S. and an additional 60% on goods from China.

Industry groups have been preparing legal challenges and lobbying Congress to pass legislation to limit the president’s power over tariffs while their members try to ship as many products into the U.S. as they can before Trump enters the White House.

There are potential legal limits to Trump’s authority, even though he has said he would unilaterally impose the increases. Under the Constitution, Congress has the power to enact tariffs. But over the years, through various legislation, Congress has delegated a large degree of that authority to the president to be able to use tariffs for national security purposes, in an emergency, or to combat unfair trade practices by another country. That has allowed past presidents, including Trump himself in his first term, to levy hefty fees on a range of products from specific countries.

During his first term, Trump faced little resistance from the courts and Congress for tariffs he placed on imports of steel and aluminum from certain countries and thousands of products coming from China. But Trump’s latest proposal would be much broader, covering every product from every country, raising more pressing questions about whether he’s overstepping the power he’s been given by Congress, according to lawyers and business groups.

The conservative-majority Supreme Court, which repeatedly ruled against President Joe Biden on the broad use of executive power without the approval of Congress, could be receptive to arguments that Trump would be going too far, some legal experts predict.

“It’s a really important question whether the Congress can just turn over the running of the government to the president,” said Alan Morrison, a professor at George Washington University Law School who was involved in litigation against Trump’s earlier steel tariffs.

New legal challenges are certain and will be brought by “anybody who imports anything,” he added. The only thing stopping such lawsuits would be a reluctance to annoy Trump, who is widely seen as a “vindictive man,” Morrison said.

‘Another bout of inflation’

On the campaign trail, Trump made tariffs central to his plan to revive the American economy, arguing that putting significant duties on imports would encourage companies to relocate their manufacturing plants to the U.S. and protect industries from cheaper overseas competition. Tariffs are paid to the federal government by the company importing a product from overseas either to sell that product directly to consumers or to use it as a component in another product being assembled in the U.S.

“To me, the most beautiful word in the dictionary is tariff, and it’s my favorite word,” Trump said at the Chicago Economic Club in October. “It needs a public relations firm to help it, but to me, it’s the most beautiful word in the dictionary.”

But economists and businesses have warned that tariffs would likely have little effect on driving manufacturing back to the U.S. because of the costs, logistics, regulatory barriers and lack of labor that many industries would face in moving production stateside.

Instead, companies in the past have largely passed the cost of the tariffs on to consumers in the form of higher prices or absorbed the costs, cutting into their profits, according to a study by the National Bureau of Economic Research.

Trump’s 2018 tariffs on steel and aluminum led to a reduction in U.S. manufacturing employment because of higher costs for companies using steel and aluminum in their products, according to a study by the Federal Reserve Board.

“If the tariffs that the former president suggested during the campaign go into effect, we think that’s going to have an inflationary effect,” said Ed Brzytwa, vice president of international trade for the Consumer Technology Association. “Consumers just voted in the election in a way that suggests they did not like inflation over the last four years, and we don’t want another bout of inflation here in the United States.”

Among the tech products that would be most affected by the proposed tariffs are tablets, smartphones and video game consoles, Brzytwa said.

CTA and other industry groups said they are preparing to mount legal challenges to the proposed tariffs and pushing Congress to take action on legislation to limit the president’s authority when it comes to tariffs, like a bill introduced in September by Sen. Rand Paul, R-Ky., that would require congressional approval for nearly all tariffs.

While Trump has said he has the power to enact tariffs without Congress, something he did during his first term, Sen. Rick Scott, R-Fla., suggested that it would likely take action from Congress, including support from Democrats, to carry through with the tariff proposal.

“The tariffs, that most likely is going to require 60 [votes] unless there’s some way we can get that done through reconciliation with 51,” Scott said during an interview on Fox News on Sunday. Republicans currently hold 52 seats in the Senate.

But outside of congressional action, the fight against tariffs will likely fall to the judicial branch. Courts have given the president a fair amount of leeway in imposing tariffs for national security reasons, leaving it largely up the the president to make the determination on whether a certain country or product poses a risk to the nation’s defense, said Petros Mavroidis, an expert on international trade at Columbia Law School.

‘Ripe to challenge’

During his first term, Trump slapped tariffs on Canada, a close ally, using a national security justification before granting the country an exemption. But a broad array of tariffs on allies “could cross the line,” especially as the Supreme Court has taken a generally pro-business stance in recent years, he added.

“My bottom-line takeaway is that all statutes that delegate tariff authority to the president are tied to specific action on a product against a single country,” said Jennifer Hillman, a professor at Georgetown Law Center who also specializes in international trade law.

It would be “really problematic” the more the Trump administration departs from what Congress has specifically authorized in delegating power to the president on tariffs, Hillman added.

During the Biden administration, the Supreme Court embraced a theory called the “major questions doctrine.” Biden’s ambitious plan to wipe out billions of dollars in student debt was one of the proposals the Supreme Court faulted.

In fact, lawyers who challenged Trump’s tariffs on goods from China and lost in the Court of International Trade — before the recent Supreme Court rulings expanding the major questions doctrine — are now pushing those arguments on appeal.

“This is a classic example of a ‘major questions’ case,” the lawyers wrote in a recent filing.

They argue that a provision of the Trade Act that allows for existing tariffs to be modified was not intended to be an avenue for the government to massively ratchet up those tariffs.

The same provision, Section 307, is “maybe one of the most obvious ways for Trump to follow through on a threat of increasing further tariffs on China,” said one of the lawyers involved in the litigation. “That is one that’s squarely vulnerable under the major questions doctrine.”

The U.S. Court of Appeals for the Federal Circuit has not yet heard oral arguments in the case, but its ruling could have an impact on Trump’s new plans and tee up the issue for the Supreme Court.

Conservative justices have also appeared sympathetic to what is called the “nondelegation doctrine,” which states there are limits to how much of its core powers Congress can willingly assign to the executive branch.

The court narrowly ruled against embracing a version of the doctrine in a 2019 case challenging a law that gave the attorney general considerable leeway to implement the federal sex offender registry. Another opportunity to take up the issue is currently pending at the court. It involves legal challenges to the Federal Communications Commission’s role in imposing fees on phone users that are used to expand access to telecommunications services.

In the first Trump administration, that theory was pushed by groups challenging steel tariffs but did not gain traction. The Supreme Court declined to take up the issue.

One problem for any potential challengers is a Supreme Court precedent from 1976 called Federal Energy Administration v. Algonquin, which said one of the key provisions that allow the president to impose tariffs — Section 232 of the Trade Expansion Act — does not raise any nondelegation issues.

But Hillman said that with the court’s current 6-3 conservative majority, there might be an appetite to revisit that and related questions.

“There’s a notion that the time is becoming ripe to challenge the president’s authority to do these things under these statutes,” she said.

Despite the legal grounds for opposing the tariffs that groups may have, any action in the courts could take years to resolve, with companies likely having to pay the tariffs until they wait for a resolution. In the meantime, companies have been ramping up their shipments of imports to try to get as many products into the U.S. as possible before any potential tariffs take effect.

“I think people will be looking at every possible solution, and I think there are views on both sides about how promising a legal approach would ever be, but certainly not in the near term,” said an industry official involved in trade policy. “I don’t see a lot of hope or promise for any action in the immediate or near term.”

When Trump imposed a 7.5% tariff on millions of shoes coming to the U.S. from China in 2019, the Footwear Distributors and Retailers of America sued, arguing that footwear was outside of the scope of the original investigation into unfair trade practices by China. The case is still making its way through the courts.

This time around, the group is largely focused on working with the incoming administration to get its products excluded from future tariffs, arguing there isn’t a national security risk from importing shoes from China and that there is little chance shoe production would move back to the U.S. because of the lack of materials, supply chain and labor here, said Matt Priest, the trade group’s CEO.

“We’ll continue to engage in the legal process around any action,” Priest said. “But our expectations are pretty low as it relates to finding some relief via the courts.”



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *