U.S. court rules Trump does not have ‘unbounded authority’ to impose tariffs

Open this photo in gallery:

The U.S. President does not enjoy “unbounded authority” to impose tariffs as he sees fit, the U.S. Court of International Trade has ruled in a decision that places a strict curb on a tool Donald Trump has used as a cudgel in international relations.

The ruling, which will almost certainly be appealed, applies only to tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. Some of the levies Mr. Trump imposed on Canadian imports, including those on steel, aluminum and cars, have been set in place under other authorities not covered by the ruling.

CBSA says 67 per cent of drugs seized in Operation Blizzard were coming into Canada from U.S.

Nonetheless, the unanimous ruling – written by a panel of three judges, one of them appointed by Mr. Trump – orders that the U.S. lift the tariffs Mr. Trump placed on Canada and Mexico on fentanyl-related grounds, as well as global tariffs he ordered on April 2, which he called “Liberation Day.”

The ruling covers two cases filed against the tariffs, one by businesses that rely on imports and another filed by a dozen states.

“They may be popping some Champagne corks in Ottawa as well as we are doing here,” said Ilya Somin, a law professor at George Mason University who is co-counsel on one of the cases, filed on behalf of several U.S. businesses.

“The ruling is not just limited to the plaintiffs in the case. It’s a permanent injunction against the tariffs overall,” he said. “And so if it stands, then it will stop all of these tariffs – both the Liberation Day tariffs against almost every country in the world, and also the specific ones against Canada, Mexico and China.”

For Canada, the decision – if it stands – will eliminate tariffs applied to goods not compliant with the U.S.-Mexico-Canada agreement. However, the levies on automobiles, steel and aluminum “are still in force,” said John Boscariol, an international trade lawyer with McCarthy Tétrault. “Those are still very painful for certain sectors of our economy, and this doesn’t change that, unfortunately.”

In the ruling, the Court of International Trade says the text of IEEPA that allows the President to regulate imports does not authorize “the President to impose whatever tariff rates he deems desirable. Indeed, such a reading would create an unconstitutional delegation of power.”

Unlike Section 232 of the Trade Expansion Act of 1962, which Mr. Trump used to impose autos, steel and aluminum tariffs, the IEEPA does not actually authorize tariffs.

The U.S. Constitution specifically places the powers to tax and tariff in the hands of Congress, although legislators have in past decades delegated some of that authority to the presidency. But much of that authority, the ruling says, must be exercised using other legal authorities, which have much more stringent regulatory requirements and cannot be imposed at the President’s whim.

For that reason, the decision says Mr. Trump’s “Worldwide and Retaliatory tariffs” – including the baseline 10-per-cent tariff imposed on April 2 – are “contrary to law.”

The court rejected an argument that Mr. Trump was exercising political judgment in assessing and responding to an emergency, and therefore his actions could not be scrutinized by a court.

Instead, it said, to use emergency powers under IEEPA, a president must act in response to a foreign threat, that threat must be “unusual and extraordinary,” a national emergency must be declared, and the President’s actions must “deal with” the threat as it has been identified.

The court rejected the tariffs Mr. Trump brought in against Canada, China and Mexico on the grounds that each of those countries was a source of fentanyl coming into the U.S., because import taxes have no obvious connection to the problem of illegal narcotics importation into the U.S. Merely using tariffs as a tool of leverage is not allowed under the law, the court wrote.

“A dam deals with flooding by holding back a river,” the court wrote. The Trump administration’s argument, by contrary, is far more expansive. “If ‘deal with’ can mean ‘impose a burden until someone else deals with,’ then everything is permitted.”

The White House argued that the U.S.’s trade deficits, which the tariffs are meant to address, constitute an emergency and that the court does not have the right to check the President’s actions.

“It is not for unelected judges to decide how to properly address a national emergency,” spokesman Kush Desai said in a statement following the ruling.

Oregon Senator Ron Wyden, the top Democrat on the Senate finance committee, said the court ruling was a step forward in Congress’s efforts to retake control of trade from Mr. Trump. Historically, Congress has delegated authority on trade to successive presidents with the understanding that they could get free-trade deals made more quickly. In the Trump era, however, Congress has often pushed for preserving free trade while Mr. Trump has ordered sweeping tariffs.

“I’m committed to retaking Congress’s authority over trade for good and shutting down Trump’s ability to unilaterally declare trade war with the world,” Mr. Wyden said in a statement.

The court found that IEEPA was specifically written to constrain presidential powers. The decision cited a comment from the late John Bingham, a former member of the House of Representatives who chaired the House International Relations Committee’s Subcommittee on Economic Policy. Mr. Bingham criticized a predecessor piece of legislation as giving “the president what could have been dictatorial powers that he could have used without any restraint by the Congress.”

In court, lawyers for the Trump administration had argued that only Congress could overturn the Trump tariffs, and only through a two-thirds vote.

”At the end of the day, Congress can review. Congress can put pressure on the president,” Brett Shumate, a lawyer acting for the federal government, said last week.