Trump's supporters should be careful what they wish for

WASHINGTON, DC: On November 5, the US Supreme Court will hear oral arguments in a case challenging President Donald Trump’s 'reciprocal tariffs'. As we have argued in an amicus brief signed by dozens of economists representing a wide range of ideological, partisan, and professional backgrounds, the court should side with the lower courts and declare the tariffs unlawful.

If it does not, this year’s harmful tariffs will remain in place – that is, until the president once again decides to change the rates, exempt certain industries, or target countries for punishment. Worse, the court would lock in Trump’s – and any president’s – ability to impose transformative economic policies without a vote in Congress.

Until now, the US Constitution has generally been interpreted as requiring express congressional authorization to change major rules governing how the economy works. At stake in this case is nothing less than effectively modifying the Constitution to grant vast unilateral powers over the economy to the executive branch.

The bulk of the tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA) have been justified as a response to an alleged emergency caused by the “unique and extraordinary threat” that the trade deficit supposedly represents. Our amicus brief rebuts this claim on the grounds that the trade deficit is not unique, not extraordinary, and definitely not a threat.

The United States has run trade deficits for many decades, but its ability to buy more from the world than it sells is financed by foreign capital that flows willingly into US bond and equity markets. These years have been marked by strong job growth, backed by world-beating innovation and impressive rates of new company formation. Whatever your view of America’s underlying problems, they are not the result of the trade deficit.

But the administration has also justified IEEPA tariffs on other grounds. For example, it has imposed tariffs under the guise of combating the fentanyl epidemic and to strongarm Brazil into not prosecuting former President Jair Bolsonaro. It also threatened to impose tariffs on Colombia back in January, when Colombia refused to accept military flights with deported migrants. As if to dare the court, just last week Trump announced an additional 10% tariff on Canadian imports because the province of Ontario ran an anti-tariff ad featuring a recording of former President Ronald Reagan’s views on trade.

The administration seems to believe that IEEPA allows it to declare practically anything a unique and extraordinary threat; it claims that the president’s determinations are “essentially judicially unreviewable”. The president can then declare an emergency that gives him access to the statute’s vast array of tools, not just tariffs.

But the truth is that the IEEPA does not even mention tariffs. It does give the president many other powers, such as the ability to “prohibit… the importing or exporting of currency or securities,” or to “regulate… transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof”. The president may also “void… any transfer… of… any property in which any [foreign] national has any interest”.

In the future, under a different president, these tools could easily be deployed for purposes Trump’s supporters are unlikely to favour. The president could declare a climate emergency, as many on the left demanded during President Joe Biden’s administration, and impose a European Union-style Carbon Border Adjustment Mechanism (CBAM). If the 'reciprocal' tariffs are valid under IEEPA, a tariff that varies with the carbon emitted in producing imported goods and services is surely valid as well. If anything, the case that the tariffs “deal with” that issue (which would become a declared emergency) is easier to make than in the case currently being litigated.

The president could also declare an emergency over erosion of the corporate tax base and use IEEPA tools to enforce a global minimum tax. The Biden administration reached an agreement with over 130 other countries to establish such a tax regime, which was never implemented due to congressional opposition. With IEEPA tools in hand, a future left-leaning administration could implement such a tax regime without congressional authorization. It could target corporations deemed to be undertaxed and punish the countries where they operate (and book profits) with tariffs and other economic restrictions.

Or the president might declare a crypto corruption crisis. He could then ban all crypto trading involving foreign counterparts, or require detailed reporting on each transaction involving cryptocurrency “in which any foreign country or any national thereof has or has had any interest” – in other words, every crypto transaction.

All of these schemes, and many more, rely on the same interpretation of IEEPA as the Trump administration is asking the Supreme Court to endorse.

Congress has been effectively powerless in the face of an emergency declaration since the Supreme Court banned the legislative veto, as it now requires veto-proof majorities in both the House and the Senate to override the president’s determination. This means impeaching the president is easier than overriding his determination that we are in the midst of an emergency caused by the unique and extraordinary threat posed by Canadian advertisements.

Thankfully, even if the court chooses to interpret the statute in this manner, it may still point to constitutional limitations on the ability of Congress to delegate its powers to the executive branch. Under its so-called major questions doctrine (established by the Supreme Court under current Chief Justice John Roberts in 2014), a decision “of vast economic and political significance” requires clear Congressional authorization – more explicit than the broad language of IEEPA.

The court has applied the major questions doctrine to executive actions like the Centers for Disease Control and Prevention’s pandemic-era eviction moratorium, stating that $50 billion worth of economic impact triggered it. The impact of Trump’s tariffs is many orders of magnitude greater than that.

There is a line of argument, endorsed by Justice Brett Kavanaugh in his concurrence in FCC vs. Consumers’ Research earlier this year, that the major questions doctrine applies only to domestic matters. That should not matter for the current case. In the early decades of the Republic, tariff revenue typically constituted more than 80% – and often more than 90% – of federal revenue.

Given that context, a foreign-policy exception to the major-questions doctrine that applies to tariffs, and recognises independent presidential authority in imposing tariffs, seems entirely incompatible with the Constitution, which assigns the power to raise revenue to Congress.

Lower federal courts have already reached that conclusion. The Supreme Court should affirm it.

Copyright: Project Syndicate, 2025.
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