A special federal court on Wednesday blocked the Trump Administration from enforcing any of the sweeping, globe-wide tariffs that the President imposed on imported goods – price controls that have upset the entire U.S. economy and sent U.S. and foreign financial markets into wild up-and-down swings.
Because President Trump has such a strong personal devotion to tariffs as government policy, the new ruling was one of the most severe setbacks he has suffered in a wide variety of courts across the nation that have ruled against him on a variety of issues. A White House official immediately denounced the new decision as a “judicial coup.”
The Constitution gives Congress the power to set tariffs, the U.S. Court of International Trade ruled, and a President cannot exercise that power unless given explicit permission to act, and Congress has not done that under a 1977 law dealing with emergencies in U.S. trade with other nations.
That law, the court decided unanimously, does not assign to the President authority “to impose whatever tariff rates he deems desirable. Indeed, such a reading would create an unconstitutional delegation of [Congress’s legislative] power.”
The 49-page ruling by a three-judge panel of the New York City-based court was put into final effect, unless overturned by a higher court. It is, for now, binding nationwide against two types of tariffs adopted by the President since he returned to office: tariffs on all goods coming from almost all countries that trade with the U.S. and special tariffs on Canada, Mexico and China designed to stop the import of dangerous drugs, such as fentanyl.
Trump has repeatedly set new tariffs, then promptly backed off or postponed them, and then re-imposed them. That process has left businesses of all kinds thoroughly perplexed and unable to make corporate decisions or future plans. It is the ongoing uncertainty, financial analysts have said, that has roiled the economy, end to end.
The court’s order would protect companies and state governments that themselves import any goods on which they would have to pay tariffs (payments go to the federal Customs Bureau) and also protects companies that buy goods from importers and have the tariff costs passed on to them.
The Trump Administration promptly filed an appeal to the next higher tribunal that deals with trade laws: the U.S. Court of Appeals for the Federal Circuit. Tariff disputes and other specialized controversies over federal policies and programs are handled in those two tribunals, and only them. However, the government has the option of ultimately taking such a dispute to the Supreme Court at the top of the federal judiciary.
There seems little doubt that the Administration will, sooner rather than later, ask the Supreme Court to step in and to do so speedily. Once the formal appeal notice filed Wednesday night arrives at the Federal Circuit court, the government has the option of then asking the Supreme Court to take on the case, bypassing any further review in lower courts. It can also wait for the Federal Circuit to decide.
Although the Justices are attempting to finish the current term’s work in about six more weeks, they might have to hold a special session if they plan to decide promptly. The next term does not start until October.
The Trump tariffs were challenged in the trade court by five private companies – three that must pay the broader tariffs and two that expect the tariffs to be passed on to them by importers – and by 12 states that are themselves importers of many of the items subject to the tariffs.
The three-judge panel explicitly rejected the Administration’s argument that the 1977 emergency law gave the President the power he claimed, and similarly rejected its claim that the federal courts had no authority to second-guess how the President chose to carry out foreign policy through regulating the trade deficits that Trump had claimed were threatening the nation’s security. (Trade deficits occur when the back-and-forth dealing in many types of goods between nations is out of balance, with one at a disadvantage to the other. Trump claimed imbalances with virtually all nations – including some remote island nations that have no people to engage in trade.)
All the court was doing, it said, was interpreting the meaning of a federal law, and that task is clearly one for the courts. The emergency act on which Trump had relied, the opinion said, has very specific limitations on how the President may use the powers at stake, and Trump’s tariffs went beyond all of those restrictions.
It declined to accept Trump’s claim that the nation faced a dire emergency that made it necessary to impose, first, the “trafficking tariffs” aimed at illegal drug imports, and, second, the “worldwide and retaliatory tariffs” that were to reach imports from around the world.
“No doubt,” the court said, “the courts cannot substitute their discretion for that of the President in proclaiming trade agreements, but where, as here, the President bases his action on the incorrect interpretation of the effect of a law or proclamation, the courts are not bound to accept that interpretation as correct.”
It added: “The question here is not whether something should be done; it is who has the authority to do it.”
In technical terms, the new ruling was based upon three doctrines that guide courts in interpreting what the Constitution means: (1) the “non-delegation doctrine,” which bars one branch of the federal government from handing over its powers to another, (2) the “major questions doctrine,” which bars federal agencies in the Executive Branch from adopting policies that have “deep economic and political significance” unless Congress – in very specific terms – has authorized such actions, and (3) the general principle of the basic Constitution that the powers of the national government are separated among the three branches.
No matter which approach it used, the court said in the new decision, “any interpretation [of the 1977 emergency powers law] that delegates unlimited tariff authority [to the President] is unconstitutional.”
Although the President personally signed the official orders imposing the tariffs, long-standing constitutional doctrine is that the President cannot be given direct orders by a federal court when it decides a legal dispute. Wednesday’s decision, though, explicitly requires officials of federal agencies – including the Secretary of Commerce and trade policy officials – to immediately obey the new decision. The government seems likely to ask the courts to delay Wednesday’s ruling while it pursues an appeal.
