Tariff Challenges at the High Court

12 Friday Sep 2025

Posted by Nuetzel in Executive Authority, Tariffs

Tags

Article I, Constitution, Donald Trump, Eric Boehm, Executive Power, Greg Ip, Greta Peisch, IEEPA, Ilya Somin, Power of the Purse, Protectionism, Richard Nixon, SCOTUS, Supreme Court, Tariff Revenue, Tariffs, V.O.S. Selections, Volokh Conspiracy, VOS Selections Inc. v. Trump

The world doesn’t ordinarily revolve around tariffs, but so much has happened to make tariffs into an economic and political linchpin of the moment. Donald Trump put them in the spotlight, of course, and while he’s still seeing roses, things won’t turn out entirely the way he hopes. At the tariff levels he’s instituted, this shouldn’t be too surprising.

While tariff revenue is helping to shave the federal budget deficit, the tax falls largely on the backs of American consumers and businesses with all the attending distortions that entails. Sadly, the extra revenue also seems to have offered a handy excuse to put spending cuts on the back burner. Tariffs and tariff uncertainty have businesses attempting to compromise between reduced margins and price hikes. Thinning margins due to tariffs have played a role in the weak employment numbers we’ve seen over the past few months. And tariffs, at least until now, have quite rightly reinforced the Federal Reserve’s cautious stance toward easing policy. However, the weak labor market has likely convinced the Fed to cut its short-term interest rate target, despite inflation stubbornly remaining well above the Fed’s 2% objective. That upward price pressure will remain.

Now, the legal battle over Trump’s tariff authority is about to reach a climax. That’s what I’ll focus on here. The Supreme Court has agreed to fast track the challenge to the President’s discretion to impose retaliatory tariffs unilaterally. There are two cases at hand: V.O.S. Selections, Inc. v. Trump, and Learning Resources, Inc., et al. v. Donald Trump et al. In both cases, small business plaintiffs contend that Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) is unwarranted, and that “most” of the tariff actions taken by Trump have usurped Congress’ power of the purse under Article I of the Constitution. Here’s Ilya Somin, who is a Volokh Conspiracy regular and one of the attorneys representing the plaintiffs:

“… IEEPA doesn’t even mention tariffs and has never previously been used to impose them, that there is no ‘unusual and extraordinary threat’ of the kind required to invoke IEEPA, the major questions doctrine, the constitutional nondelegation doctrine, and more.“

This isn’t the first time a U.S. president has imposed tariffs unilaterally, but it is easily the most drastic such action. Historically, nearly all tariffs were levied by acts of Congress. Prior to Trump II, perhaps the broadest tariff imposed by a President was Richard Nixon’s brief 10% surcharge on all imports, but that was lifted quickly. Presidents Johnson and Obama imposed some selective tariffs. All of these episodes seem piddling compared to Trump’s tariffs, which are both sweeping and in many cases painfully selective.

Eric Boehm notes that when it comes to major constitutional questions, the Court has taken the position that

“… executive power should be construed narrowly, not broadly …. Rather than tying itself into knots to affirm nearly unlimited executive powers over commerce, the Supreme Court should tell the Trump administration to get permission from Congress before imposing new tariffs.“

I believe that will be the general shape of the outcome here. Maybe there’s a way for the Court to allow the tariffs to stand until Congress decides to “man up”, acting one way or the other. SCOTUS would probably like to do just that! Or maybe the Court could stay the lower court’s injunction until the case is heard by the Court in full on the regular docket, or until Congress acts.

There’s a decent chance, however, that Trump’s tariffs will be struck down, leaving it up to tariff supporters in Congress to lay down statutory rules rather than put up with the impulsive craziness we’ve witnessed thus far. If the Court lets the tariffs stand, it leaves the door open for new tests on the limits of executive discretion. Here is Greg Ip at the link:

“There would also be no end to uncertainty. ‘Unlike most other tariff authorities, these tariffs are not enshrined in statute, there’s no process to change them, and they can change very rapidly, in a day, without much notice, as we’ve seen,’ said Greta Peisch, a trade attorney at Wiley Rein and former general counsel for the U.S. trade representative.“

We’ve already seen strong hints that the Administration would like to force businesses to eat the cost of the tariffs rather than pass them along to consumers in higher prices. There hasn’t been any formal action of this kind by the Administration, at least not yet. Still, one can hardly blame businesses who might perceive an implicit threat if they fail to comply. That kind of bullying represents an a massive abuse of power. The Court could do everyone a big favor by clarifying that the authority to impose tariffs rests with Congress.

An Immigration Reform Dream: What’s Trump’s Price?

08 Friday Sep 2017

Posted by Nuetzel in Executive Authority, Immigration

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Border Wall, DACA, David Harsanyi, Deferred Action on Childhood Arrivals, Deportation, Dream Act, Executive Overreach, Executive Power, Ilya Somin, Immigration Enforcement, Immigration reform, Michael Ramsey, Path to Citizenship, Prosecutorial Discretion, The Federalist, The Originalism Blog, The Volokh Conspiracy, Zachary Price

Two major issues weigh on critics and supporters of President Trump’s rescission of DACA, President Obama’s 2012 executive order establishing the Deferred Action on Childhood Arrivals program. First is the treatment of individuals who entered the U.S. illegally prior to mid-2007 at less than 16 years of age (and who were 30 or younger in 2012). Under Trump’s new order, these individuals would be subject to deportation in March 2018 or later, depending on their remaining DACA eligibility and the status of any renewal application already filed by then.

As an isolated question, draconian treatment of so-called “Dreamers” (taken from the “Dream Act”, which never made it through Congress) is difficult to justify. These individuals did not arrive here by choice or through any fault of their own, and the vast majority are now productive members of society. The problem, however, is the usual argument against amnesty: it creates an incentive for would-be immigrants to circumvent the legal immigration process in the hope of later forgiveness. If children of illegals are subject to lenient treatment once in the U.S., it probably magnifies that incentive. While some take a hard line with respect to deporting today’s Dreamers, many critics of DACA are strongly sympathetic to their plight.

The second issue defines another basis for opposition to DACA: the questionable legality of Obama’s original order. Obama issued another executive order in 2014 that essentially expanded DACA. That later order, already rescinded by Trump in June, was likely to be overturned by the Supreme Court. This article quotes from the majority opinion of the U.S. Fifth Circuit Court of Appeals:

“The administration’s interpretation of the Immigration and Naturalization Act, [5th Circuit Judge] Smith wrote, would effectively vest the Secretary of Homeland Security with the power ‘to grant lawful presence and work authorization to any illegal alien in the United States—an untenable position in light of the INA’s intricate system of immigration classifications and employment eligibility.’ In other words, Smith wrote, ‘the INA flatly does not permit the reclassification of millions of illegal aliens as lawfully present and thereby make them newly eligible for a host of federal and state benefits, including work authorization.’“

The key here is the clause “making them newly eligible for a host of federal and state benefits” without proper legislative authorization. In other words, Obama exceeded his authority. The original DACA order suffers from the same defect as the extension, and it was likely to be challenged as well. However, Ilya Somin has defended DACA as a matter of “prosecutorial discretion”, which was Obama’s original rationale for not enforcing immigration law for Dreamers. (But there is suspicion that the likelihood of adding to Democrat voter rolls appealed to Obama.) Enforcement against the children of illegal immigrants, Somin contends, is simply bad policy of the sort routinely avoided by prosecutors. In 2013, Zachary Price addressed this defense of DACA, including the application of earlier statutes specifically allowing discretion in immigration enforcement (also see this post by Michael Ramsey):

“The immigration [DACA] policy, in contrast, provides a more definite and specific guarantee of non-enforcement to a broad category of undocumented immigrants who fall squarely within the scope of removal statutes. … It’s worth noting (as some folks have helpfully pointed out to me) that the Obama Administration has maintained vigorous enforcement with respect to other groups of undocumented immigrants. But DACA goes beyond simply turning a blind eye to their unlawful presence in the country. It effectively grants a form of lawful status not contemplated by the applicable statutes through an exercise of prosecutorial discretion.

It’s true that there is a history to the practice of deferred action. Although this form of relief originated in executive practice, it’s now mentioned in several statutes, so to some degree at least Congress may have ratified it. … Yet the practice (as I understand it) originated as a form of case-by-case humanitarian relief. While immigration officials have used it categorically a few times in the past (for instance, to grant relief to immigrant students affected by Hurricane Katrina), I’m not aware of it ever being used for as broad and significant a group of immigrants as in the DACA program. So I think it’s hard to claim that there’s been even an implicit ratification of the practice sufficient to support the DACA program.“

Legislative action — a new attempt at some kind of Dream Act — could resolve the dilemma faced by Dreamers and their defenders while avoiding the legal objections to unrestrained executive authority. It’s likely that Trump is willing to exchange a continuation of the DACA regime, or even complete amnesty for Dreamers, to achieve other priorities, such as funding for his ballyhooed border wall. One could accuse Trump of using the Dreamers as pawns — why else would he have agreed to a grace period of six months? And why did he say, subsequently, that he would “revisit DACA” if Congress failed to act? That might give him some leverage with those who oppose DACA on the legal grounds discussed above, but it might undermine his ability to cut a deal for the wall or any other priority with Democrats.

David Harsanyi writes in The Federalist that “Rescinding DACA Is the Right Thing To Do“:

“If there’s one thing that exemplified Obama’s administration, it was its embrace of executive unilateralism. No administration in memory was stopped more often by courts on this front—often by unanimous Supreme Court decisions. … The Constitution makes no allowance for the president to write law ‘if Congress doesn’t act.’“

Somin notes that rescinding DACA, and even passing a law in this case, will do nothing to prevent this and future presidents from exercising excessive authority. That’s certainly true, but rectifying a case in which that authority was exceeded, along with recognition of the constitutional limits on executive authority, is worthwhile.

Congress should pass legislation offering relief to the Dreamers. In a best case scenario, new legislation would provide them with a clear path to citizenship, and it would also reform existing immigration law to allow for greater flows of immigrants through the legal process. Those provisions might come at the cost of building a wall, as well as funds for tougher immigration enforcement. And Trump has made merit-based criteria for issuing green cards and accepting immigrants a priority. That’s fine as long as: 1) “merit” is defined partly by economic needs, such as low-skilled farm labor; and 2) there is some sort of navigable process for refugees.

While the prospect of allowing Dreamers to be used as political pawns might be repugnant, the end result could be worthwhile. And we shouldn’t forget that some of those Dreamers, as children, were probably used as pawns by the very parents who brought them here.

Administrative Supremacy, Lost Checks and Balances

16 Friday Jun 2017

Posted by Nuetzel in Regulation

≈ 1 Comment

Tags

Administrative State, Chevron Deference, Cost of Regulation, Due Process, Eric Boehm, Evan D. Bernick, Executive Power, Fourth Branch, George Mason University, Glenn Reynolds, Inez Stepman, Jarrett Stepman, Judicial Deference, Mercatus Center, Philip Hamburger, Reason.com, Regulatory Dark Matter, Separation of Powers, Townhall, Two-For-One Regulatory Order

The two-for-one regulatory order issued by the Trump White House in January raises some practical difficulties in implementation. It requires that federal agencies eliminate two regulatory rules for every new rule promulgated, both in terms of the number of rules and any incremental regulatory costs imposed. Two out for every one in. Questions surrounding the meaning of “a regulation”, how to define incremental costs, and whether a particular rule is actually mandated by legislation are not trivial. Nevertheless, the spirit of this order is admirable and it serves as the leading edge of the Administration’s attempt to roll back the scope and impact of excessive government authority.

The cost of regulation is vast. Economists at the Mercatus Center at George Mason University have estimated the total cumulative cost of regulation in the U.S., finding that regulation has reduced economic growth by 0.8 percent per year since 1980. Without the additional regulatory growth since 1980, the U.S. economy would have been about 25 percent larger than it was in 2012. That’s a $4 trillion shortfall, or roughly $13,000 per person.

While regulation and administrative control over the private economy takes an increasing toll on economic growth and human welfare, the problem goes beyond economic considerations: administrative agencies have “progressively” usurped not just legislative but also judicial power. The concentration of executive, legislative and judicial power constitutes a “fourth branch of government“, a development inimical to the principles enshrined in our Constitution and a prescription for slow-boil tyranny. It facilitates rent seeking and corporatism just as surely as it creates a ruling class of individuals who act on their personal and arbitrary inclinations. We are ruled by men backed by police power, not impartial laws.

Glenn Reynolds writes that unelected rule makers and central planners are able to manipulate decisions across a broad swath of the economy and society. He quotes a new book by Philip Hamburger of Columbia Law School called “The Administrative Threat“:

“Government agencies regulate Americans in the full range of their lives, including their political participation, their economic endeavors, and their personal conduct. Administrative power has thus become pervasively intrusive. But is this power constitutional?

A similar sort of power was once used by English kings, and this book shows that the similarity is not a coincidence. In fact, administrative power revives absolutism. On this foundation, the book explains how administrative power denies Americans their basic constitutional freedoms, such as jury rights and due process. No other feature of American government violates as many constitutional provisions or is more profoundly threatening. As a result, administrative power is the key civil liberties issue of our era.“

Two previous posts on Sacred Cow Chips have dealt with Hamburger’s work. The first, “Hamburger Nation: An Administrative Nightmare“(1) provides the following explanation of his position:

“Hamburger examines the assertion that rule-making must be delegated by Congress to administrative agencies because legislation cannot reasonably be expected to address the many details and complexities encountered in the implementation of new laws. Yet this is a delegation of legislative power. Once delegated, this power has a way of metastasizing at the whim of agency apparatchiks, if not at the direction of the chief executive. If you should want to protest an administrative ruling, your first stop will not be a normal court of law, but an administrative review board or a court run by the agency itself! You’ll be well advised to hire an administrative attorney to represent you. Eventually, and at greater expense, an adverse decision can be appealed to the judicial branch proper.“

The exercise of rule-making authority, and even extra-legal legislative action by the administrative state, has economic costs that are bad enough. Hamburger also emphasizes the breakdown of the separation of executive and judicial powers inherent in the enforcement and adjudication of disputes under administrative law. This was the subject of the second Sacred Cow Chips post referenced above: “Courts and Their Administrative Masters“. It reviewed an unfortunate standard established by court precedent involving judicial (“Chevron”) deference to administrative agency fact-finding and even interpretation of law. While the decisions of administrative courts, which are run by the agencies themselves, can be appealed to the judicial branch, such appeals often amount to exercises in futility.

“…courts apply a test of judgement as to whether the administrative agency’s interpretation of the law is “reasonable”, even if other “reasonable” interpretations are possible. This gets particularly thorny when the original legislation is ambiguous with respect to a certain point.

…the courts should not abdicate their role in reviewing an agency’s developmental evidence for any action, and the reasonability of an agency’s applications of evidence relative to alternative courses of action. Nor should the courts abdicate their role in ruling on the law itself.“

This paper on Judicial Deference to Agencies by Evan D. Bernick of Georgetown Law makes the case that judicial deference is a violation of the constitutional separation of powers, concluding that:

“… in cases involving administrative deprivations of core private rights to ‘life, liberty, or property,’ fact deference violates Article III’s vesting of ‘[t]he judicial power’ in the federal courts; constitutes an abdication of the duty of independent judgment that Article III imposes upon federal judges; and violates the Fifth Amendment by denying litigants ‘due process of law,’ which requires (1) judicial proceedings in an Article III court prior to any individualized deprivation of ‘life, liberty, or property’; and (2) fact-finding by independent, impartial fact-finders.“

Inez and Jarrett Stepman in Townhall note that there are almost three million well-paid federal employees with job security that would make most private sector workers envious.

“Though the abolishment of the spoils system [which allowed civil service hiring and firing based on political party] was meant to mitigate corruption and incompetence, it has resulted in a toxic combination of enhanced agency power and an entrenched civil servant class with its own institutional—and frequently political—interests, virtually unaccountable to the president or any other elected official.“

The Stepmans discuss legislation that might stem the usurpation of lawmaking power by the administrative state. They are convinced that the administrative state must be reigned-in. Ironically, expanded executive authority means that the process of reversal is not that difficult in many cases. By way of example, here’s a piece on the ease of undoing certain Obama era regulations. Executive orders, or “the pen and the phone” in Obama’s charming parlance, lack legitimate legislative authority and can be reversed by new executive orders. I firmly believe that reversing the earlier orders is the right thing to do at the moment, but the unchecked authority that makes it possible (and the supremacy of the administrative state) is a source of economic instability, and it must end. Eric Boehm makes this point eloquently in Reason at the last link above:

“New policies that affect wide swaths of the economy and reshape entire business models should go through Congress, or at the very least should be subject to the public rulemaking process. Guidance documents and other ‘dark matter’ regulations that by-pass those processes can be un-made as quickly as they were made, leaving businesses to deal with an ever-changing and unpredictable regulatory state that does not really help anyone, no matter which side you’re on in any individual policy fight.“

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(1) The principle title “Hamburger Nation” was intended as a play on Glenn Reynolds’ paper “Ham Sandwich Nation: Due Process When Everything Is a Crime“, in which he discussed the judicial implications of over-criminalization and regulatory overreach.