Supreme Court Strikes Down “Liberation Day” Tariffs

The Supreme Court ruled against the constitutionality of the tariffs implemented by the Trump administration under the International Emergency Economic Powers Act (IEEPA). The Court’s 6-3 decision will stop, if only temporarily, President Trump’s ability to implement tariffs at will. 

The decision made it clear that the Trump administration had gone beyond what had been lawfully authorized by IEEPA. For the majority, Justice Roberts wrote that the “Court has long expressed ‘reluctan[ce] to read into ambiguous statutory text’ extraordinary delegations of Congress’s powers,” and when “Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits.”

He also cited the lack of precedent for the Trump administration’s interpretation of IEEPA, saying: “It is also telling that in IEEPA’s half-century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope. That “‘lack of historical precedent,’ coupled with the breadth of authority” that the President now claims, suggests that the tariffs extend beyond the President’s ‘legitimate reach.’”

The justices also recognized that the administration’s interpretation of IEEPA gave the executive an incredible amount of arbitrary and unconstrained power, writing: “Against this backdrop of clear and limited delegations, the Government reads IEEPA to give the President power to impose unbounded tariffs. On this reading, moreover, the President is unconstrained by the significant procedural limitations in other tariff statutes and free to issue a dizzying array of modifications at will.”

The IEEPA tariffs were bad because they were unconstitutional, but they were also bad politically and economically. They were incapable of achieving their stated ends, they fostered graft and corruption, created uncertainty, were based on the faulty notion that trade deficits are bad, put a regressive tax on ordinary Americans, drove a wedge between our America and her allies, and slowed economic growth. Removing these tariffs will bring more life, order, and growth to the American economy.

However, the fight is not over. Many questions still need answering. As Justice Kavanaugh wrote for the minority: “The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others. As was acknowledged at oral argument, the refund process is likely to be a ‘mess’” and “the IEEPA tariffs have helped facilitate trade deals worth trillions of dollars—including with foreign nations from China to the United Kingdom to Japan, and more. The Court’s decision could generate uncertainty regarding those trade arrangements.” It does not appear that there is any immediate plan in place to deal with the ramifications of the Supreme Court decision. It will take considerable time and effort to find a way forward to deal with these issues.

It is also not clear that the decision will stop President Trump from using other laws to try to justify his perceived tariff authority. The White House had already identified other justifications for Presidential tariff authority if the IEEPA case failed. Hopefully, the Court’s decision today will help expedite future cases against the administration’s use of tariffs, but it is highly unlikely that today is the end of the legal war over tariffs. While the war is not over, those who love liberty and free trade can celebrate the crucial step towards victory taken today.