Amid the flurry of unconstitutional or illegal executive orders from President Donald Trumpfor example, the freezing of congressionally approved spending, the end of constitutionally stipulated birthright citizenship, and the mass firing of prosecutorslies another one that, unfortunately, he is more likely to get away with. Under the International Emergency Economic Powers Act (IEEPA) of 1977, Trump, who earlier had questionably declared a national emergency at the U.S. border, is using this law to threaten to impose 25 percent tariffs (import taxes) on Canada and Mexico and 10 percent on China because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.
Drug flows and illegal immigration are certainly problems, though the extent to which they rise to the legal definition of a national emergency is debatable. Other means of solving them exist short of threatening to start a wider trade war with the largest U.S. trading partners and possibly threatening the post-war open-world trading system. Trumps threatened use of tariffs seems especially punitive given the minimal level of illegal immigrants and fentanyl flowing over the border from Canadain fact, the net flow of drugs seems to be in the reverse direction.
Yet, Trump believes that because the United States has the largest market in the world, such import taxes will hurt other countries more than the United States, thus making available a valuable instrument of threatened coercion. However, countries and companies trade because it is mutually beneficial for them to do so. Therefore, threatening or imposing import taxespaid by the American consumeris an economic murder-suicide.
Other countries may be hurt more than the United States, but the people of all countries are hurt by bilateral or multilateral trade wars. Slower economic growth and higher prices result when the flow of trade and market conditions are uncertain or impaired. Sometimes, this effect can be catastrophic. Many economists believe that the Smoot-Hawley tariff of 1930 and foreign retaliation deepened the economic downturn into the Great Depression. As a result of economic disruptions caused by the Great Depression and World War II, the United States was instrumental in creating (and greatly benefited from) the post-war system of free trade and free markets. Ironically, Trumps threatened import taxes and possible trade war likely will benefit China by positioning that communist country as the new guardian of free trade worldwide.
The bad economics of import taxes was succinctly summed up by Senator Rand Paul (R-KY), one of the few Republicans to criticize Trumps tariffs: Tariffs are simply taxes. Conservatives once united against new taxes. Taxing trade will mean less trade and higher prices.
Another question that has gotten far less attention is whether imposing import taxes under the IEEPA law is constitutional. Make no mistake, other presidents have used IEEPA many times since 1977 to retaliate for other countries behaviorin sixty-nine national emergencies, to be exactbut these all placed U.S. restrictions on financial transactions in target countries rather than imposing taxes on Americans for their imports. This misuse of IEEPA will probably result in legal challenges.
Furthermore, most of the sixty-nine declared national emergencies in which IEEPA was invoked were hardly that. The National Emergencies Act of 1976 was designed to reduce presidential misuse of this overwrought designation for everyday non-catastrophic problems. Yet that act failedprobably on purposeto constrain presidential use of such emergencies since it didnt define them. Instead, it allowed the president to declare one as long as a specific reason was given. One recent example of the abuse of the designation of national emergencies was Barack Obamas economic sanctions against foreign computer hackers.
An even more important problem is the past delegation of Congresss constitutional responsibility to regulate Commerce with foreign Nations and to lay and collect Taxes, Duties, Imposts, and Excises via laws allowing broad discretion by the president.
In addition to initiating war, treaties, and budgeting, Congress has also forfeited its power in international trade and taxation to an imperial presidency. In the almost inevitable legal challenges to Trumps tariff policy, a primary one should be via the non-delegation doctrine, which maintains that Congress cannot cede legislative powers to the executive. This occurs often enough in order to blame the president for bad policies. However, the Supreme Court should view presidential abuse of trade policy with a jaundiced eye and force Congress to exercise its rightful powers.