In February, the U.S. Supreme Court struck down President Donald Trump’s sweeping “Liberation Day” tariffs. Among American commentators, the reaction was immediate and intense. “The Supreme Court dealt President Trump perhaps the biggest blow of his second term,” said the CNN host Fareed Zakaria. The New York Times columnist David French said the case “may prove to be the most important Supreme Court decision this century.”
These breathless responses are understandable. Trump had justified the tariffs with a staggeringly broad interpretation of the International Emergency Economic Powers Act, and the ruling was a check on his expansive theory of executive power and a setback for his agenda. It showed that the judiciary will not endlessly defer to his actions. But the case does not solve the underlying challenge facing U.S. trade policy. Trump’s use of the IEEPA may have been uniquely brash, but it did not emerge from a vacuum. Over the course of the twentieth century, the legislative branch has delegated many core trade functions to the executive branch, most notably through laws authorizing the president to negotiate trade agreements and unilaterally impose tariffs and import restrictions. And starting in the 1990s, Congress retreated from trade policy almost entirely. As a result, the laws governing presidential tariffs have not kept pace with dramatic shifts in the global economy. This divergence has led the executive branch to take actions on U.S. trade policy that are testing the patience of courts, creating friction with geopolitical partners, and wreaking havoc on global markets.
The Supreme Court’s ruling is unlikely to put an end to such decisions. In fact, Trump is already using other authorities to reimpose many of the tariffs that were just struck down. The reality is that neither the judiciary nor the executive branch can clean up this mess on its own. Instead, Congress must actively reclaim its constitutional role as the ultimate arbiter of American trade policy by overhauling legislation on tariffs. This means giving the president new, selective tariff powers to solve twenty-first-century challenges while paring back existing laws to prevent executive overreach and abuse. The goal should be to create a streamlined set of tariff authorities tailored for specific economic problems and tied to concrete, objective criteria for what is considered a national security threat—criteria dictated by Congress rather than presidential discretion. Without such reforms, the executive branch will continue to exercise de facto control over U.S. trade policy, with potentially grave implications for national security and the constitutional order.
MORE POWER TO YOU
In the decades after World War II, American trade policy was centered largely on protecting and expanding global commerce. U.S. officials struck trade deals with Washington’s allies and encouraged other countries to open their economies, as well. Even after Congress granted the executive branch greater tariff authority through the 1962 Trade Expansion Act and the 1974 Trade Act, presidents made sparing use of their powers. This restraint was partly a function of U.S. economic dominance during the earlier part of the Cold War, which reduced domestic political pressure to implement protectionist policies. But it also reflected a bipartisan preference for resolving trade tensions through diplomacy in order to avoid a recurrence of the tariff wars of the 1930s, which worsened the Great Depression and helped produce global conflict.
This open approach to trade came under pressure in the 1980s when a strong U.S. dollar, bolstered by high interest rates and government spending, and American industrial decline caused the U.S. trade deficit to balloon. In his second term, President Ronald Reagan imposed dozens of retaliatory tariffs on European and Japanese exporters in response to what he alleged were unfair trade practices. Congress acted, too, passing bills that mandated tariff increases and import restrictions (in some cases prompting presidential vetoes). But this pivot toward confrontation soon gave way to a new consensus among U.S. officials in favor of even greater liberalization. Both the legislative and the executive branches backed a swath of new trade deals, such as the North American Free Trade Agreement with Canada and Mexico. They helped negotiate and create the World Trade Organization in 1995, which largely banned participating states from enacting tariffs. If one WTO member felt that another was violating this rule, it could challenge that state’s trade practices through the organization’s independent dispute settlement system. If the resulting panel of arbitrators found that the country imposing the original tariffs was in the wrong, the one making the complaint could respond with painful, retaliatory tariffs.
But just as free trade was reaching its apex, Congress began to step back. Since 2011, Congress has approved only one conventional foreign trade accord: the U.S.-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement in 2020. On tariffs, meanwhile, Congress has left the executive branch to its own devices. In fact, the last significant legislative revision to executive tariff authority came in 1988, when Congress passed the Omnibus Trade and Competitiveness Act to spur the White House to make greater use of its existing tariff powers. All the laws Trump has invoked to impose tariffs, the IEEPA included, were originally passed more than 40 years ago.
Starting in the 1990s, Congress retreated from trade policy almost entirely.
This step back wasn’t surprising. When the United States joined the WTO, it effectively agreed that the boundaries of presidential tariff power would be set in Geneva rather than in Washington. But if Congress thought that the organization would serve as an enduring constraint, it was mistaken. During his first campaign for president, Trump railed against free trade, and upon taking office, his team effectively disabled the WTO’s dispute resolution mechanism by blocking the appointment of arbitrators. The administration then went about conducting its trade policies with little concern for multilateral rules. Some analysts hoped that Trump’s defeat in 2020 would spark a reversion to open trade practices, but the Biden administration ultimately followed a similar approach, in some cases increasing tariffs Trump had imposed and adopting equally broad readings of the executive branch’s trade powers. Biden invoked Section 301 of the Trade Act of 1974, which authorizes the president to impose tariffs for unfair trade practices, to align tariffs on Chinese goods with his industrial policy agenda. The tariffs were formally justified as a response to Beijing’s forced technology transfers, which required foreign companies to share proprietary technology in exchange for access to the Chinese market. But they also dovetailed with onshoring incentives under the 2022 CHIPS and Science Act and Inflation Reduction Act by making it harder for Chinese electric vehicles, solar panels, and semiconductors to displace U.S.-made equivalents.
When Trump returned to office, he took his first-term approach even further, issuing sweeping tariffs on imports from virtually every U.S. trading partner. This strategy has been highly controversial both at home and abroad. Yet with Congress on the sidelines, the White House was able to do as it pleased until the Supreme Court finally intervened, which took nearly a year and by which time the average U.S. tariff rate was higher than at any point since the end of World War II. And unlike Washington’s earlier embraces of protectionism—the McKinley Tariff of 1890, for example, or the Smoot Hawley Tariff of 1930—these high tariffs were imposed not by legislation but by executive action. This was made possible through a creative interpretation of the IEEPA and several other old laws giving the president the authority to regulate foreign commerce. Over his two terms as president, for instance, Trump has made unprecedently broad use of the 1962 Trade Expansion Act, which authorizes tariffs on imports that threaten U.S. national security, to limit the entry of foreign steel, automobiles, lumber, and pharmaceuticals. And he has announced that he will circumvent the Supreme Court’s voiding of his IEEPA tariffs by instead imposing a temporary surcharge on all imports under an obscure, rarely used provision of the 1974 Trade Act that was designed to prevent capital from bleeding out of the United States. In March, the Trump administration also launched an astonishing 76 investigations under Section 301 as a likely pretext for imposing tariffs on 60 economies that collectively account for around 99 percent of U.S. trade. The White House, in other words, has created an ad hoc trade regime that can be paused by courts but never fully stopped.
Unlike with the IEEPA, tariffs imposed under these other laws require an investigation or a report from the executive rationalizing their use. They are also subject to standard executive branch procedural requirements. But once established, the tariffs can be impulsively waived with virtually no constraints, making an already permissive system vulnerable to abuse. In both his terms in office, Trump has made liberal use of tariff waivers to support his deal-centered style of diplomacy, which has been criticized for lacking transparency and objectivity to the point of corruption.
TARIFF TROUBLES
There is a place for tariffs in American foreign policy. When used effectively, they can advance a wide variety of economic and national security goals. As officials from both the Biden and the Trump administrations have argued, a laissez-faire approach to trade that prioritizes efficiency and reduces barriers has steep costs for the United States, including fragile supply chains, lower wages, increased exposure to economic coercion, the offshoring of jobs and emissions, and a weakened domestic manufacturing sector.
But freewheeling use of outmoded tariff authorities is a poor response to these challenges. To begin with, it invites instability in U.S. trade policy and the federal budget. Even without the IEEPA, the Trump administration is claiming vast discretion to impose new tariffs and adjust or eliminate existing ones. As a result, judicial scrutiny of presidential trade actions carries far larger implications now than it has in the past. (When the Supreme Court struck down Trump’s IEEPA restrictions, for instance, it upended U.S. trade policy overnight and cut off a major revenue source for the U.S. government.) This complicates the work of policymakers at all levels of government and creates uncertainty around investment in American manufacturing. Tariff adventurism by the executive branch also risks alienating geopolitical partners and undermining efforts to develop new models for trade cooperation. The Biden administration’s attempt to build a transatlantic market for “green” steel and aluminum foundered in part because European officials viewed U.S. national security tariffs on those goods as illegitimate—a perception that was not helped by an adverse ruling against the tariffs at the WTO. Those European countries found it hard to believe that exports from fellow NATO members could constitute a threat to U.S. national security, resulting in damage to not only transatlantic economic relations but also diplomatic ones.
Finally, the repeated repurposing of executive branch tariffs to reflect presidential preferences rather than congressional intent undermines the rule of law and separation of powers. Applying statutes in ways that are misaligned with their original purpose creates a permission structure for deviations from the constitutional order that can be repeated in the future. Trump’s use of the IEEPA to impose tariffs on Brazil after the country’s supreme court ruled against former Brazilian President Jair Bolsonaro, a Trump ally, for example, suggested that executive tariff authority can be used to help the president’s friends rather than to respond to genuine economic emergencies. Trump’s aggressive use of tariff power, in other words, is integral to his efforts to concentrate power in his own hands. Whenever he issues a trade policy unmoored from what Congress clearly envisioned with its laws, he further erodes the power of the legislative branch.
DOING HOUSEWORK
The judiciary can slow this erosion process. But as Trump’s dance with the Supreme Court over the IEEPA shows, it cannot stop it. Instead, Congress will have to reassert itself. U.S. legislators must pass fresh laws reworking executive trade authorities—particularly those related to tariffs and import restrictions. The current legal framework for U.S. trade policy predates globalization and has not kept pace with seismic shifts in the distribution of global manufacturing, the decline of the WTO, and the growing threat of climate change. It is therefore essential that Congress provide the White House with modernized tariff tools that allow the president to effectively address twenty-first-century challenges while still preserving congressional oversight.
A good place to start would be tariffs designed to deconcentrate critical supply chains and reduce the risk of economic coercion. A law that allows the U.S. president to impose targeted tariffs on a country when the share of imports of a strategically important good from that country exceeds a designated threshold, for example, would provide a neutral mechanism for reducing U.S. economic dependencies and diversifying sources of key technologies and commodities. Congress could also expand the use of safeguard measures, a seldom-invoked trade tool that authorizes temporary emergency tariffs and other restrictions when a sudden surge of imports threatens a domestic industry. A modernized approach to safeguards would cover not just harms to U.S. industrial production but also to jobs, the environment, and the industrial base more broadly. These safeguards could also be used to address threats to U.S. interests even when they do not lead to import surges, such as overproduction of steel by nonmarket economies.
Legislators should also update the legal definition of countervailable subsidies—forms of government support that give foreign exporters an unfair advantage selling to the U.S. market and are usually addressed through a neutralizing tariff that levels the playing field. Those subsidies should extend to policies in the exporting country that contribute to wage suppression and weaken environmental standards in exporting countries, building on a recent Department of Commerce regulation. Suppressing worker power or allowing indiscriminate pollution gives these foreign firms unfair competitive advantages when they subsequently export to the United States. Finally, legislators should empower the president to impose climate-minded tariffs on imported goods—for example, levies taxing imported goods based on the carbon dioxide emitted during their production process—as a first step toward creating a carbon adjustment mechanism at the U.S border, similar to the kind recently adopted by the European Union.
On tariffs, Congress has left the executive branch to its own devices.
These new tariff powers will not by themselves fix a broken status quo. Congress must also narrow the scope of existing tariff authorities so that they leave less room for executive discretion. This means, at a minimum, imposing procedural requirements and objective standards independent of executive whims that will dictate tariff waivers. It may also require reforming some the major tariff authorities that presidents have used since the 1970s. For example, recent use of Section 232 of the 1962 Trade Expansion Act, which has historically been used to tariff imports from adversaries but is now being applied to goods from allies, has stretched the definition of U.S. national security almost beyond recognition. Last December, Trump imposed tariffs on imported wood products, using the reasoning that dependence on foreign lumber could leave the United States “unable to meet demands for wood products that are crucial to the national defense and critical infrastructure.” This claim bears little relationship to economic reality, given that the United States’ primary source of foreign lumber is not a powerful adversary, but Canada.
This is not to suggest that Trump’s and Biden’s national security tariffs have done more harm than good in all cases. Section 232 tariffs on steel and aluminum products have put the U.S. steel industry on sounder economic footing than those of other advanced economies, such as the European Union and the United Kingdom. (Indeed, after criticizing U.S. steel tariffs, the EU is now seeking to double its own duties on steel to 50 percent). If Congress were to narrow the scope of Section 232 in a way that precluded using tariffs to address excess capacity in steel markets, it would need to ensure that another tariff authority existed to deal with the problem.
But the United States must make sure its trade policy does not needlessly antagonize its partners and allies. To that end, any legislative agenda should be pursued in conjunction with other countries. Ideally, domestic reforms would be done alongside a reform of the multilateral trade system in order to prevent conflicts between domestic laws and WTO rules. The dismal prospects for WTO reform make this an unlikely scenario. But modernized U.S. tariff authorities could be the basis for broader direct cooperation between the United States and its partners, such as integrating new tariff regulations into foreign trade agreements. Another option would be for Congress to direct the president to negotiate new “bound” tariff rates—the maximum tariff Washington will impose on a particular good no matter its country of origin—outside the WTO, with a critical mass of like-minded economies. (Those bound rates would not limit the executive’s authority to impose tariffs to deal with specific, time-limited challenges.) Such a move would likely be well received by the EU in particular, and it would help reassure many traditional U.S. trading partners that despite the executive branch’s tendency to reach for economic restrictions, Washington remains committed to working with them and will respect their interests.
Many of these reforms are unlikely to happen quickly. The Trump administration will be reluctant to give up its power, and a heavily polarized, gridlocked Congress will struggle to claw back its rightful authority. But even slow, incremental progress is superior to the chaos of the current system. Until Congress reclaims its constitutional responsibilities, U.S. trade policy will not only be wildly chaotic. It will increasingly resemble a game of chicken between the executive and judicial branches in which the United States’ democracy and economy consistently lose.
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