Trump’s New Rationale for Setting Tariffs

President Trump has a new legal rationale for unilaterally setting tariffs, five months after the Supreme Court ruled that the commander in chief lacked, by law, this power. Pointing to the authority delegated to the president under the Smoot-Hawley Tariff Act of 1930, Mr. Trump is saddling duties of 50 percent on many Canadian goods. Economist Paul Krugman calls the move “almost surely illegal,” but the Act’s text suggests Mr. Trump has a case.Mr. Trump is relying on Section 338 of the 1930 law to impose the tariffs, “in response to Canada’s discriminatory treatment of American products,” the White House says, with the goal of “leveling the playing field for crucial American exports — cars, alcohol, and dairy.” Armed with this new justification for tariffs, CNN reports, Mr. Trump’s demarche “sends a message to every other US trading partner: You could be next.”Mr. Krugman argues that Mr. Trump is depending on an “obscure and never-before-used provision of Smoot-Hawley” to set these new duties. Yet a law’s novelty is hardly a bar to presidential action. The Act allows the president, “when he finds that the public interest will be served,” to “by proclamation specify and declare new or additional duties” on “any foreign country” when “he shall find as a fact that such country” is discriminating against America.The law defines such discrimination as, say, “any unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country.” The duties are allowed, too, if another nation imposes “any customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction, or prohibition,” that “place the commerce of the United States at a disadvantage” to other countries.This language appears to give presidents broad discretionary power, though an analysis by the Cato Institute finds that setting tariffs under the Smoot-Hawley law “necessitates proof of discrimination against the United States in favor of other nations.” That, Cato reports, “could be challenging” in the case of, say, “countries that are WTO members bound by most-favored-nation requirements that restrict discrimination among members.”A visiting scholar at Georgetown Law, Peter Harrell, reckons that, “assuming the tariffs do in fact come into force” — a big if, to be sure — Mr. Trump’s new tariffs would “make for interesting legal challenges.” Yet the authority granted to Mr. Trump by Smoot-Hawley could prove more durable than the power found in the law he cited for his earlier round of Liberation Day tariffs, the International Emergency Economic Powers Act of 1977.Mr. Trump contended that the 1977 law gave him authority “to unilaterally impose unbounded tariffs,” as Chief Justice Roberts wrote in the Supreme Court’s majority opinion striking down the duties. Yet while that measure gives presidents power to “regulate trade,” per the chief justice, the act “contains no reference to tariffs or duties.” As a result, the high court majority concluded that it “does not authorize the President to impose tariffs.”Although several justices questioned the president’s authority to impose tariffs as a breach of the Constitution’s separated powers, the majority opinion was grounded in a statutory interpretation of the 1977 law. Seeing as how the 1930 Smoot-Hawley Act does explicitly give presidents the power to set tariffs, could Mr. Trump fare better in federal courts with this new round of duties? This point was mooted in February by Justice Brett Kavanaugh.Though the majority acted to strike Mr. Trump’s tariffs, Justice Kavanaugh wrote in a dissent, “the decision might not substantially constrain a President’s ability to order tariffs going forward.” He pointed to “numerous other federal statutes” that “authorize the President to impose tariffs,” including the 1930 law. It’s not our intention to suggest that such tariffs amount to wise policy, but it could prove hard to deny the president’s power to act on this head.

Trump’s New Rationale for Setting Tariffs

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