The U.S. Supreme Court's decisions on tariffs will have long-term consequences for the dynamics between the Court and President Donald Trump.Hannah McKay/Reuters
Paul Rosenzweig is the founder of Red Branch Consulting and formerly served as deputy assistant secretary for policy in the U.S. Department of Homeland Security.
Early in November, the United States Supreme Court heard two of the most consequential cases to appear on its docket in a long time – challenges to President Donald Trump’s tariff policies. How they are resolved by the Court will have a significant impact on countries like Canada, which continue to be affected by Mr. Trump’s tariffs. It will also have long-term consequences for the dynamics between the Court and Mr. Trump.
Mr. Trump has, since the beginning of his second term, viewed the unilateral imposition of tariffs on other countries as a critical part of his foreign policy and as an essential aspect of his effort to enhance revenues. Early in his term, he imposed broad tariffs on China, Canada and Mexico for their alleged failure to limit the flow of fentanyl into the United States. Later, in April, on his so-called “Liberation Day,” Mr. Trump imposed an even broader array of tariffs on more than 90 countries around the globe. And since then, Mr. Trump has continued his tariffing extravaganza, imposing and then cancelling and then reimposing and re-cancelling tariffs on Chinese goods, and even putting a tariff on Brazilian products for the offence of prosecuting his friend, former Brazilian president Jair Bolsonaro.
Mr. Trump has asserted that his tariff authority is grounded in the International Emergency Economic Powers Act (IEEPA). Under this law, the president has emergency powers to “deal with any unusual and extraordinary threat” to the American economy from foreign nations. These include the powers to “block” certain transactions, or “regulate” or “prohibit” the importation of foreign goods.
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The cases before the Court therefore turn on two distinct issues – one a question of statutory construction, and the other a broader question of deference to a president’s declaration of an emergency or “extraordinary threat.”
The statutory issue is easy to understand. The IEEPA never uses the word tariff, nor any similar word like “duties” or “customs.” In the absence of the word, challengers argue that tariffs via presidential decree aren’t authorized. Though that is pretty persuasive (how can he have a power that isn’t listed in the law?) there is a counter-argument – namely, that since Mr. Trump can completely prohibit the importation of a good altogether, that greater power should include the lesser power to impose a tariff instead. Put colloquially, if the President can ban Brazilian nuts, why can’t he also just tax them?
It may be that the Supreme Court will decide the case on these grounds. That is how the lower court decided, concluding that the IEEPA did not grant Mr. Trump the tariff power he claimed. If the Supreme Court follows this path, then to reinstitute his tariff policy Mr. Trump will have to proceed on a case-by-case basis. He might still, for example, be able to do the hard work of investigating claims of price dumping for Italian pasta or justifying anti-competitive Canadian steel tariffs. But those narrower tariffs are much harder to implement and won’t feed Mr. Trump’s need for the broader authority he claims to have.
Still, if the Court rules against Mr. Trump on that ground, they might be doing him a favour. The lower court avoided the larger issue of Mr. Trump’s general authority to declare emergencies. And that is an issue that has implications far wider than tariffs.
What are the “emergencies” that drive Mr. Trump’s tariffs? The two that are before the Supreme Court are the growth in opioid trafficking, and the “lack of reciprocity in our bilateral trade relationships.” These are hardly “emergencies” in any normal sense of the word – the opioid crisis is nearly 20 years old and America’s trade deficit problems are nearly older than Mr. Trump’s children. To be sure, neither of those are especially good things for America. But as an excuse to deploy unilateral powers, they are little more than assertions of authority under the guise of a fake emergency.
This aspect of the case is particularly important to Mr. Trump, because false emergency declarations lie at the heart of his broader grab for power. He has invoked the Alien Enemies Act to combat an “invasion” by the Tren de Aragua gang, and cited a crime wave to justify National Guard deployments. If the Supreme Court accepts at face value these manifestly risible justifications, then it will reset the balance between the American President and the courts – greatly empowering the former. If, on the other hand, they reject the argument, Mr. Trump will lose a powerful tool.
And so, the tariff case (to be decided sometime next year) is incredibly important. It will decide the fate of many Canadian tariffs. But it also may decide the balance of power for Canada’s nearest neighbour.