A legal challenge against President Donald Trump’s use of executive power took centre stage last week, in a sign that his administration is entering a more challenging phase. Greater pushback from the courts has coincided with the departure of the president’s once closest partner Elon Musk, historically low approval ratings, and obstacles to delivering on the president’s foreign policy agenda.
In a significant setback to Trump’s international economic agenda, a federal trade court ruled against a broad set of his tariffs levied under a law that was intended to deal with threats during national emergencies. Following a swift appeal, a higher court has stayed this judgment while it considers the administration’s arguments.
In a unanimous opinion at the US Court of International Trade, a three-judge panel – one appointed by Trump himself – found in the initial judgement that the president’s ‘liberation day’ and retaliatory tariffs exceeded his authority under the International Emergency Economic Powers Act (IEEPA). It also found that Trump’s earlier tariffs on Mexico and Canada did not relate sufficiently to his justification for imposing them – that they were to curb a drug-related emergency.
Legal battles
This decision, the first significant ruling on Trump’s tariff agenda, was a political, policy, and market shockwave. Its long-term impact, and that of a parallel judgment in a Washington federal court, is uncertain. But these two rulings do confirm that efforts to restrain executive authority are gathering steam and will continue to play out in the courts.
Article 1, Section 8 of the US Constitution makes clear that ‘Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises’. To the extent that the administration has embraced tariffs as an economic tool of first resort, it has done so through powers Congress delegated to the executive through statutes. Significantly, the Court of International Trade found that Trump’s assertion of authority exceeded that delegated to him under the statute. The fact that the president had used tariffs to create leverage for bilateral trade negotiations contributed to the ruling that the emergency justification did not hold.
In reaching its decision, the legal doctrines on which the Court of International Trade drew included: nondelegation, which places limits on Congress’s ability to cede its legislative powers to other entities, and major questions, which notes that Congress must ‘speak clearly’ when it delegates particularly significant powers. These legal doctrines had previously been used by the conservative legal movement to obstruct Democratic policy objectives, but now may impede a Republican president.
Many expect these cases will shortly reach the Supreme Court. If the IEEPA tariffs are deemed to be invalid, this may offer some relief for lawmakers who are currently hesitant to cross the president. The political consequences for the president are more complex. Most Americans think tariffs will cost the country more than they raise in revenue. A prohibition on the administration’s most extreme tariff impulses could prevent damaging economic outcomes, and so assuage the public’s concerns, but it would also suggest that the president had attempted to exceed his legal authority and been knocked back by the court.
The potential effects of tariff rulings also extend to include attitudes towards the Supreme Court itself. Public views of the Supreme Court have continued to deteriorate, and half of Americans have an unfavourable view of the court. A Supreme Court ruling against the president is bound to be seen through a partisan lens. Republicans currently view the court far more favourably than Democrats. A ruling against the president may increase the Democrats’ confidence in the court, although various pending decisions could cut in the other direction.
Impact on trade
The ruling will not, for now, neutralize Trump’s leverage over the US’s trading partners. As president, Trump retains robust tools to pursue his objectives.
But the president has a special affinity for tariffs, so he may respond to a setback by focusing on sectoral tariffs, a significant tranche of which are already in force. Since the court’s ruling, Trump has vowed to double tariffs on steel and aluminium to 50 per cent. He may also, if he chooses, impose temporary levies of up to 15 per cent to tackle balance of payments deficits. He could work with Congress to pass new legislation underpinning additional tariff authorities, but his administration has shown a strong preference for executive action to date. The president has many other tools to coerce states and pursue his objectives, including expanding his use of sanctions and export controls.
Ultimately, unilateral economic action abroad and executive orders at home remain at the heart of his administration’s agenda, and the US commitment to pursuing an coercive and unilateralist international economic policy will continue to undermine the rules-based order while antagonising and unsettling US partners.
