The Supreme Court’s Complicated Takedown of Trump’s Tariffs

The case decided by the Court, Learning Resources, Inc. v. Trump and Trump v. VOS Selections, was the consolidation of two lawsuits brought by small businesses and states, challenging Trump’s use of IEEPA. IEEPA is a powerful tool; its provisions include a long list of trade-related measures, such as imposing export restrictions and quotas, that a president can take in a national emergency. The problem for Trump is that “tariffs” are not on the list. Related terms, such as “duties” or “customs,” are also not related terms. The entire global market-shaking tariff system — under which, Roberts wrote in the majority decision, Trump asserted “the independent authority to impose tariffs on imports from any country, of any product, at any time, for any duration” — was built on nothing more than the awkward placement of the word “regulate” within a few lines of the word “import.” And, as Roberts said and a six-justice majority found, “those words cannot carry such weight.”

Justice Elena Kagan, in a agreement joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, identified nine verbs in IEEPA (such as “investigate,” “block,” “direct”) and eleven foreign trade-related objects (“acquire,” “withdraw,” “transfer”), meaning there are “99 actions a president can take to deal with a foreign threat.” But if the action in question, “regulating…importing,” really meant “imposing tariffs,” it would be “the odd one out,” in Kagan’s words, because “exactly none of the other 98 involve an increase in revenue.” IEEPA has been used by various presidents more than seventy times, for example to impose sanctions on Iran and Cuba; none used it for rates.

This revenue issue was very important to the justices because tariffs are a type of tax, and in our constitutional system the power to tax is a central aspect of Congress’s power, not the President’s. (In 2012, the law creating Obamacare survived a major constitutional challenge because the Court ruled, in a landmark decision also authored by Roberts, that the individual mandate to acquire health care was a form of tax.) The assumption is that if Congress gave the president the ability to impose tariffs, as he sometimes does, he would make it reasonably clear that he is doing so. But IEEPA does not resemble any kind of tax law. In oral arguments in the case, D. John Sauer, Trump’s solicitor general, tried to sidestep the issue by arguing that Trump’s tariffs should not be considered taxes at all — a position that was virtually ridiculed even by some conservative judges.

And Trump’s new tariffs have generated considerable revenue – nearly two hundred billion dollars, according to an estimate by economists at the Penn-Wharton Budget Model for Reuters. But Roberts’ opinion says nothing about whether or how that money could be repaid. “While the Supreme Court’s decision was pending, hundreds of importers filed a complaint with the Court of International Trade, seeking a refund of the customs duties paid,” Mark Wu, a professor of international trade law at Harvard Law School, told me. “These cases have been suspended, but with the decision handed down, they can now continue. » On Friday, Trump questioned why the Court didn’t issue a sentence telling him whether he should “keep the money or not keep it.” He added: “I suspect this will have to go to trial over the next couple of years. » A moment later, Trump increased that estimate to five years.

The lack of guidance on refunds may indicate that Learning Resources, Inc. v. Trump was not a straightforward case for the justices, despite the lopsided outcome. There are seven separate opinions, totaling one hundred and seventy pages. The main dissent, that of Brett Kavanaugh – whom Trump thanked on Friday for “his genius” – is more than sixty pages long. Justices Samuel Alito and Clarence Thomas joined Kavanaugh; Thomas also wrote a dissent in favor of broad tariff powers for presidents. And even judges who agree with each other are, in some ways, at odds. Roberts mustered a majority for only part of his opinion; Midway through the term, the three Liberals split, meaning that while there was a 6-3 majority in favor of abolishing the tariffs, there was no complete consensus on the reasoning or its implications. Specifically, liberals refused to join the section in which Roberts wrote that Trump’s tariffs are illegal because they do not meet the requirements of what is called the “major issues doctrine.”