Trump is using emergency law to impose tariffs. Is that legal?
Sign up now: Get ST's newsletters delivered to your inbox
US President Donald Trump delivers remarks on reciprocal tariffs at the White House in Washington, DC, on April 2.
PHOTO: AFP
Follow topic:
President Donald Trump’s trade tariffs have hammered financial markets, prompted an outcry from world leaders, and raised the specter of a US recession.
He declared a 90-day pause
Even so, his statement, in which he announced an increase in the tariffs on imports from China, underscored that he is calling the shots, though the US Constitution gave Congress the last word in setting import duties.
Mr Trump invoked a law called the International Emergency Economic Powers Act (IEEPA) on April 2 to set a blanket 10 per cent tariff
On April 9 he suspended the imposition of the additional tariffs on most countries while raising duties on Chinese imports to 125 per cent, a figure he hiked to 145 per cent the next day.
He first deployed the IEEPA in February when announcing an initial volley of tariffs on Mexico, Canada and China.
At least two lawsuits have been launched that challenge Mr Trump’s use of the act, though major industries caught in the tariff crossfire have held off from any legal action for now.
Even if the plaintiffs prevail and Congress is given the power to rescind the tariffs, there is no certainty it will do so.
What is the IEEPA?
The act was passed in 1977 to address concerns in Congress about the unchecked power conferred on presidents by the Trading with the Enemy Act of 1917.
The IEEPA nevertheless gives the president sweeping authority to regulate certain financial transactions when declaring a national emergency in response to an “unusual and extraordinary threat”.
It has traditionally been used to place sanctions on countries, companies and individuals.
Then-President Barack Obama used the act in 2014 to impose sanctions on Russia in response to the country’s annexation of Ukraine’s Crimea peninsula.
Then-President George W. Bush used the statute in 2001 to tackle terrorist funding after the Sept 11 attacks.
Why is Mr Trump using the IEEPA to impose tariffs?
The IEEPA does not impose the same constraints on presidential action as other statutes.
By declaring a national emergency, Mr Trump can act swiftly to impose tariffs without first needing to order an investigation and await its findings.
During his first administration, Mr Trump relied on Section 232 of the Trade Expansion Act of 1962 to impose a 25 per cent tariff on imported steel products.
That statute requires a probe by the Department of Commerce to determine whether the import of certain products damages US national security before the president can impose tariffs.
Has any other president used the IEEPA to impose tariffs?
Mr Trump became the first president to do so in February when he announced the measures against Mexico, Canada and China.
To justify those tariffs, he declared that undocumented immigrants and illegal drugs flowing across US borders posed an “extraordinary threat”.
In April, Mr Trump linked the national emergency to the country’s “large and persistent trade deficit”.
The closest comparison comes from the administration of Mr Richard Nixon.
Mr Nixon used the Trading with the Enemy Act to justify a 10 per cent tariff on imports. His aim was to address what he argued were unfair exchange rates that created a balance of payments problem.
What lawsuits challenge Mr Trump’s use of the IEEPA?
The first case was brought by Emily Ley Paper, a small retailer that sells stationary products under the Simplified brand name.
In its suit, filed in response to the first two rounds of tariffs on imports from China, it claims it will suffer “severe” harm from the “unconstitutional” levies.
The company is represented by the New Civil Liberties Alliance, a powerful legal group backed by conservative funding.
Members of the Blackfeet Nation, a Native American tribe in Montana that benefits from trade with Canada, also sued.
The plaintiffs argue that although Congress has given the president permission to impose tariffs in certain limited situations through other statutes, he is not authorised to do so using the IEEPA.
They also argued that Mr Trump’s tariffs have no bearing on the national emergencies he declared.
For example, Emily Ley Paper argued that tariffs are not necessary to resolve the US opioid crisis, and that Mr Trump himself has said his goal is to raise federal revenue.
Are more lawsuits coming?
US importers that are forced to pay higher duties may also have standing to bring lawsuits because they could argue a direct injury from the tariffs.
However, big industry groups have so far been reluctant to challenge the tariffs in court.
The Retail Industry Leaders Association put on hold a lawsuit it had been planning because of the “current climate” and unwillingness among its members to proceed, Ms Deborah White, general counsel for the organisation, wrote in an email seen by Bloomberg News.
White noted the potential difficulty in finding law firms willing to sue after Mr Trump’s attacks on the legal community.
What do experts say about Mr Trump’s use of the IEEPA?
Some law professors say that, although Congress has delegated tariff authority to the president through certain statutes, the IEEPA is not one of them.
While the law gives the president the authority to regulate imports, it does not specify whether that means tariffs.
The White House has implied that the authority is implicit in a fact sheet stating that tariffs are a way for governments to regulate imports and exports.
Emily Ley Paper argued that if the IEEPA is interpreted to allow tariffs, then it violates a “non-delegation doctrine” that limits the ability of Congress to hand off legislative powers.
The Supreme Court has said in recent decades that Congress can delegate if it provides “intelligible principle” for agencies to follow.
The IEEPA “lacks an intelligible principle that constrains a president’s authority”, the company argued.
How likely are any legal challenges to succeed?
That is unclear, as this is the first time a president has used the IEEPA to impose tariffs.
Some legal experts said the challenges might have a chance if they reach the Supreme Court, which used the “major questions doctrine” to curb federal power during Joe Biden’s presidency.
Explaining that principle, the majority of the justices wrote in one case that courts “expect Congress to speak clearly when authorising an agency to exercise powers of vast economic and political significance”.
But another expert noted that a past legal victory by Mr Nixon on his tariffs could “pose an obstacle” to non-delegation challenges.
At the time, an appeals court reversed a lower court decision by letting Mr Nixon impose some tariffs.
Might Congress actually scrap the tariffs?
Seven Republican senators have backed a bipartisan move to reassert Congress’s tariff-setting powers amid growing unease in their party about the trade war’s economic toll.
There is clearly unease among Republican lawmakers over Mr Trump’s tariffs, but for now many either support the measures or are too fearful of being punished by Mr Trump for disloyalty to break ranks.
For this reason, the bill may not even get a vote in the House of Representatives. BLOOMBERG
