Tag: Tariffs

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Trump’s New Tariffs ThIs Weekend are Even More Illegal Than the Old Ones, Or So They Say

Lev Menand and Joel Michaels (N.Y. Times), Again, Trump Completely Misreads the Law[1]

International trade law is a very, very specialized discipline, and casually thought out opinions are likely to be in error. Viz. my own apparent error. 

Shortly after the Supreme Court kicked Trump’s ass on Friday of last week, Orange Mussolini took another bite at the apple and purported to invoke Section 122 of the Trade Act of 1974 in order to impose a new set of worldwide tariffs. My impression was that, the second time around, he was on stronger legal ground.

First, unlike the situation with the International Economic Emergency Powers Act of 1977, it’s clear that tariffs are a legitimate tool under Section 122. Second—and here was the big misunderstanding—I thought that the Supreme Court would probably be reluctant to second-guess a presidential finding about an alleged economic emergency, invoked by a President to use authority that Congress had clearly granted to him. 

Messrs. Menand and Michaels argue, convincingly, that this is fallacious, because the “emergency” that Trump invoked to employ Section 122 is not the kind of emergency that Section 122 actually addresses. Trump thinks that the Section 122 is all about trade imbalances, whereas, they argue, it’s not about trade imbalances at all, but instead its about financial imbalances. They write,

The provision is not about trade imbalances. Other parts of the statute address those. It is about financial imbalances — in particular ones that threaten financial stability.

The text and context of the law is clear: A Section 122 “payments problem” involves a flight from the U.S. dollar. At the moment, no such problem exists.

The president’s own lawyers essentially admitted as much months ago. In a filing in the earlier case, the Justice Department acknowledged that trade deficits are “conceptually distinct from balance-of-payments deficits,” citing the congressional history. And it suggested that Section 122 did not give the president the authority to impose tariffs to address trade deficits. (Section 122 does not “have any obvious application” where the concerns “arise from trade deficits,” the Justice Department’s lawyers wrote.)

To further appreciate how badly the president is misreading the law, it is necessary to place this particular statute in the context of the early 1970s. …

If you want further elucidation regarding the fascinating topic of financial imbalances, please read the article. 

But here’s the bottom line. It’s as if Trump, faced with an emergency caused by foreign killer wasps, has purported to use extraordinary powers granted to the President to address toxic chemical spills. 

The issue is not whether the foreign wasps are actually invading, nor is it about deference to the President’s judgment about the magnitude of the wasp problem or the appropriateness of his desired remedy.

The issue is legal, not factual or judgmental, and it has nothing to do with deference to presidential fact finding.

The issue is whether Orange Mussolini is using the wrong damn law as a flimsy cover for another blatant power grab.

[1] Lev Menand in an associate professor at Columbia Law School, so he must be good. Joel Michaels is a Fellow in Public Economic Law at that same institution, my legal alma mater. 

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The Tariff Decision, Looking Forward: How Smart Was it for Trump to Hurl Vile, Hyperbolic Insults at Justices Gorsuch and Barrett and at Chief Justice Roberts?

As we have seen, the Learning Resources decision was 6 to 3, but there were three distinct factions:

  • the liberals, who thought that ordinary tools of statutory interpretation condemned Trumps IEEPA tariffs, and that the “major questions doctrine,” which they did not recognize, was not germane to the decision,
  • three of the rightwing justices, who cherished the “major questions doctrine” and thought it was of considerable relevance in ruling against Trump on the tariffs, and
  • the three other rightwing justices, who also cherished the “major questions doctrine” as a general matter, but who squirmed to deny its relevance to the case at bar.

In other words, at least for this case, probably for other tariff cases, and possibly for future cases on other topics, the six rightwingers have split down the middle into two opposed factions.

Justices Gorsuch and Barret, along with Chief Justice Roberts, are the swing votes. Who wins a future tariff case will turn on whether Barrett, Gorsuch, and Roberts side with the liberals or whether they side with the other three rightwingers. 

And, make no mistake, there will be future tariff cases. There will be future tariff cases up the wazoo. 

Trump’s post-decision hissy fit will do nothing to persuade its targets—who are, of course, the very three people he must persuade if he is to have an icecube’s chance in Hell of prevailing in future tariff litigation.

The hissy fit is also intended to threaten and intimidate, but I am persuaded that intimidation will not work either. Why? Because if Barrett, Gorsuch, and Roberts were going to be intimidated, I think we would already seen the effects of that intimidation. 

Call the ambulance.

He has shot himself in the foot again.

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The Tariff Decision, Looking Forward: Does Team Trump Have a Workaround to the Supreme Court’s Ruling?

Bottom line, at the end of five minutes of trenchant analysis: “Tariffs as an instrument of arbitrary power have been dismantled.”

Feel free to visit Krugman’ substack—it’s behind a paywall—if you so choose. 

Meanwhile, in a world of great uncertainty, a couple of things are certain: Trump will continue to try to abuse whatever tariff power he may have, there will be lots and lots of litigation, and some of those cases will reach the Supreme Court in the coming months.

Among progressives, opinions differ—as do kneejerk reactions—about the likelihood of any degree of success by Team Trump. International trade law is not my field, and I have no crystal ball. But I do like this analysis by someone whose handle is EricAZ (not otherwise known by me from Adam’s housecat), who posted this yesterday on Daily Kos:

Trump’s Decision to Beat a Dead Horse on Tariffs Will Hasten His Fall

A smart person would take his lumps and move on. Trump is not a smart person. Let’s assume that the “best people” that Trump brought to his Cabinet and the White House picked the statute most favorable  to his tariff plans. One of the most conservative Supreme Courts since the Civil War beat him with a stick. 

Now, Trump is preparing to work his way through other statutes looking for support for his tariff plans. (Keep in mind that the U.S. Constitution says tariffs are under the control of Congress. And the Supreme Court just upheld that fact.)

Having been told, “Don’t let the screen door hit you,” Trump wants to try his luck again. Never mind that the public does not like tariffs, does not like paying higher taxes, does not like a loser and has dropped its esteem for Trump to a level somewhere between Nixon and a road-Kill skunk. 

But here the valiant Donald prepares to make his stand. 

Here is the list of statutes the president can use to regulate trade:

Section 232 of the Trade Expansion Act of 1962: Allows the president to impose tariffs if imports threaten national security. Pam Bondi can argue that avacados and plastic toys threaten national security. Even with Pete Hegseth guarding the coast, we probably can withstand avacado imports. 

Section 201 of the Trade Act of 1974: Enables the president to impose tariffs if an import surge threatens a U.S. domestic industry. Pretty narrow in focus. Imaginary ballrooms are not an important domestic industry. 

Section 122 of the Trade Act of 1974: Allows the president to impose tariffs to address international payments problems, with no cap on the level of duties or duration. Despite Trump’s best efforts, we still don’t have an international payments problem. 

Section 301 of the Trade Act of 1974: Allows the president to investigate unfair trade practices and impose tariffs, with no limits on the size of the tariffs. Having tried to impose tariffs on the entire world, including uninhabited islands, it will be hard to make a case that the entire world is engaged in unfair trade practices. Especially when Trump claims to have made trade agreements with most of the world. 

International Emergency Economic Powers Act (IEEPA): Provides the president with broad authority to impose tariffs in response to economic emergencies. Been there, done that. The court said no. 

Many people expect Trump to use one or more of these statutes to repeat the long process he has gone through with his failed IEEPA effort. 

One thing the justices really hate, is doing work. Especially repeating work that they or some other judge has already done. 

Most likely, any new version of Trump tariffs would be thrown out at the District Court level very quickly. The court would likely leave an injunction against the new tariffs in place until the case works its way to the Supreme Court. At this level, there are no do-overs. The High Court would decline to hear the case and the injunction would stand. 

All this happens against a background of Trump’s declining numbers and people’s distaste for high prices and unnecessary tariff taxes at the grocery store. Political parties sometimes survive immense blunders and sometimes they don’t. 

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Why Greenland? From Whence This Madness?

IMHO, George Will and Ross Douthat have some pretty good things to say this morning. Will sees a crisis caused by “a president’s fragile ego, as usual.” Douthat has two alternative explanations: “malignant narcissism flavored with insane Nobel Peace Prize-related self-pity” or “how Trump always negotiates.” There’s much truth in both op-eds, and you would probably do well to read them.

You would also do well to take a look at the online front page of the Wall Street Journal—a good source for the business/financial elites’ view of the world. Part of it is reproduced above.

The elites are worried. The thing they value most—maybe the only thing they value at all—is their money. Trump’s behavior is increasingly threatening their core values.

I’m posting right now because I have my own take on the Mad King’s current thought processes. It’s set forth in the next paragraph, which is all speculation—but reasonable speculation based on known facts, analyzed logically.

Trump has been told—probably by the Solicitor General, the unfortunately named Mr. Sauer—that he is going to lose the tariff case in the Supreme Court. Bigly. Faced with that grave forthcoming affront to his fee-fees, Orange Mussolini has devised an insane Hail Mary pass: use tariffs to force Europe to give him Greenland, thereby “demonstrating” to the Supreme Court the great “value” of his favorite play-pretty, his usurped power to bully other countries with tariffs and threats of tariffs.

There will be consequences. 

I hope y’all have a lot of popcorn on hand. 

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Waiting for the Supreme Court Decision on the Tariffs

On November 5, the Court heard oral argument in Trump v. V.O.S. Selections (litigation sponsored by a libertarian foundation) and other cases challenging Trump’s attempted usurpation of tariff setting powers in purported reliance on the International Economic Emergency Powers Act. The decision should come soon. (There was a rumor that it would come yesterday, but that did not happen.

How to Predict the Outcome of a Case

For best results, you want to ask two big questions—one ruthlessly objective and the other relentlessly subjective. 

Your first big question is, Which side should win the case? Gather the fact and take a rigorously objective view of them, study applicable legal principles, and ask how an intelligent, diligent, and utterly fair-minded court would apply the relevant principles to the relevant facts.

Your second big question is, Which side does the court want to win the case? Consider the judge’s (or judges’) political ideology, legal ideology, prior rulings, class interests, friends, and anything and everything else you know about the court’s leanings. 

Obviously, if the party that should win the case is also the party that the court wants to win the case, then it’s easy to predict that that party is probably going to win the case.

What Factors Apply Here?

Here is how I see it.

1. This is a case of statutory interpretation. Pretty much all the traditional canons of statutory interpretation point toward the conclusion that Trump does not have the statutory power he claims to have.

2. Taking a textualist and originalist view of the matter, one reaches the same conclusion.

3. Prudential considerations go the same way: the tariffs are harming almost all segments of the economy.

4. Because the tariffs are creating broad economic harm, they are hurting Republicans politically, and will probably play an important role in the 2026 elections.

5. Trump will scream like a stuck pig when he loses the tariff cases, but, even if he doesn’t know it, a negative decision would tend to save him from his own misjudgment.

6. Liberals don’t like tariffs, and would applaud a decision against Trump.

6. Conservatives don’t like tariffs, and would applaud a decision against Trump.

Conclusion

A decision against Trump on the tariffs would be thoroughly unsurprising.

A decision the other way would mean that something very, very odd had happened. 

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At This Point, He’s Just Flinging Poo at the Walls

But if Walmart doesn’t pass on the tariffs, then China loses no sales because of the tariffs. And U.S. manufacturers who compete with Chinese-made goods gain no advantage from the tariffs.

The only thing that has happened is that Walmart owners suffer an economic loss. There is no economic loss to China or its exporters. And there is no enhanced incentive to “on-shore” American manufacturing. Which was the original stated goal of the tariffs.