War Tariffs

This is a co-authored post by Kathleen Claussen and Tim Meyer.

Last week, President Trump announced that the United States would be imposing new tariffs of 50 percent of the value of any product coming from any country that sells weapons or provides military aid to Iran.

Some commentators questioned what statutory authority the president would use as a legal basis for these tariffs since the president’s announcement was silent on that point. Kevin Hassett, Director of the National Economic Council at the White House, publicly argued that the president could impose these tariffs under the International Emergency Economic Powers Act (IEEPA) because the United States is “in a state of conflict [and] the IEEPA policy is exactly designed for that.” Even within the Trump administration that view did not appear to command a consensus, with U.S. Trade Representative Jamieson Greer noting that, while IEEPA can be used to impose embargoes, it can’t be used for tariffs after the Supreme Court’s February decision in Learning Resources.

The Supreme Court made clear that IEEPA does not authorize the president to impose tariffs or increase tariff rates. Moreover, the Court noted that IEEPA is a peacetime statute. It expressly reserved the question of whether the president might have the power, either under the Constitution and/or other statutes, to impose tariffs during a war.

Putting to one side the fact that Congress has issued no declaration of war nor authorized the use of force against Iran, what, under the Constitution, could the president do during a war? We have written about the complexities of the Constitution’s “foreign commerce power” in a forthcoming article. There, we note that, at the time of the nation’s Founding, and in the early years of the Republic, the Founders made clear that the president does not have any foreign commerce power of his own. Nothing in the Constitution or in the practice of lawmakers in the late eighteenth century suggests that the president can impose tariffs without congressional authorization, regardless of whether the nation is engaged in an armed conflict. The power to regulate commerce with foreign nations is a power held exclusively by Congress. Nothing about being at war changes that.

In the recent Learning Resources case, the government made several arguments in support of its claim that IEEPA authorizes tariffs. As relevant to war powers, the government argued that the president enjoys the constitutional power to impose tariffs during wartime. While conceding in Learning Resources that the United States was not at war, the government—borrowing from an amicus brief by Aditya Bamzai—contended that Congress had ultimately codified that authority in IEEPA as applied to peacetime emergencies.

The government’s argument did not, however, win the day. As the Chief Justice wrote:

According to the Government, those precedents acknowledge an inherent Presidential power to impose tariffs during armed conflict. And, the argument goes, Congress in TWEA [the Trading With the Enemy Act], and then in IEEPA, codified those precedents. But this argument fails at both steps. Insofar as the Government relies on our wartime cases themselves, they are facially inapposite. Regardless of what they might mean for the President’s inherent wartime authority, all agree that the President has no inherent peacetime authority to impose tariffs.

 Other justices also addressed these issues. In his concurrence, Justice Gorsuch commented in a footnote:

Whatever the full scope of the President’s Article II war powers may be (and the briefs before us reveal a healthy debate whether they include the power to impose tariffs), those powers are not implicated here.

And in his dissent, Justice Kavanaugh embraced the ideas advanced by the government. He wrote that:

U. S. history from the 1800s through IEEPA’s 1977 enactment illustrates how the statute came to incorporate the President’s long-recognized authority to impose tariffs during wartime. Long before the initial 1917 enactment of the Trading with the Enemy Act, which was IEEPA’s predecessor, the President possessed inherent wartime authority to prohibit commercial relations with enemy nations.

We disagree with Justice Kavanaugh’s claim when it comes to any “inherent wartime authority” the president might have to regulate foreign commerce. Justice Kavanaugh is right that, long before the enactment of TWEA, presidents imposed commercial restrictions on enemy nations, but they did so as authorized by Congress. A congressional declaration of war—essentially, a delegation to the president to prosecute a war—was thought also to grant the president the power to embargo commerce with the enemy.

The more difficult question arises with respect to countries with whom the United States was not at war but whose commercial policies implicate U.S. interests in war.

Here, President Trump seeks to impose tariffs not on products from Iran, which is already subject to sanctions, but on countries that engage in military trade with Iran. These so-called secondary tariffs have become a popular tool in recent months. Last year, the president sought to impose secondary tariffs on products from countries, such as India, importing Russian oil and on products from countries importing Venezuelan oil, for example. He relied on IEEPA to impose those tariffs, and after February's Supreme Court decision, he declared those additional duties to be no longer in effect. Justice Gorsuch, in his Learning Resources concurrence, spoke only of direct tariffs on enemy states, noting: “IEEPA is not a wartime statute, nor does the President claim we are at war with the countries whose goods are subject to the tariffs.” (And, to be sure, the TWEA expressly requires a congressional declaration of war before using the same language as IEEPA concerning "regulate . . . importation".)

But in the early years after the Founding, even where foreign commercial policy was critical to U.S. policy toward warring European nations, presidents did not act alone in imposing restrictions on foreign commerce with those nations. That is, presidents still regularly sought congressional authorization for embargoes of trade with countries against whom Congress had not issued a declaration of war.

For example, Washington’s 1793 Neutrality Proclamation did not itself create an embargo. As Sai Prakash and Michael Ramsey have explained, the Proclamation merely announced a policy binding only on those within the executive branch, one that could only be enforced against the general public to the extent that private actions violated existing criminal laws. It was not until Congress passed statutes in 1794 authorizing embargoes that the president enjoyed the authority to impose an embargo as such. And as we explain in our article, the presidential practice of seeking congressional authorization for embargoes continued through the Jefferson and Madison administrations, including during the War of 1812 with respect to European nations other than the United Kingdom.

As one of us explained in an amicus brief in Learning Resources, the examples marshaled by Professor Bamzai and relied on by the government and Justice Kavanaugh are not to the contrary, and in particular do not speak to the president’s ability to impose tariffs on imports from noncombatant nations into the United States. They rely on three examples of the president imposing monetary exactions during wartime. During the Mexican-American War and the Spanish-American War, the United States collected duties on imports into occupied foreign territories to offset the costs of the war and occupation. In a series of cases, the Supreme Court upheld these duties as lawful on the grounds that they were imposed on foreign, occupied territory during wartime. They were not imposed on imports into the United States proper. Indeed, in Fleming v. Page, the Supreme Court rejected the argument that paying duties to the United States in an occupied Mexican port, when such duties were collected solely pursuant to the president’s commander-in-chief power, could count as paying duties upon import into the United States. The president lacked the power to change U.S. customs laws, even if he had the power to collect duties in occupied territory. The third example involved President Lincoln’s decision to collect license fees on cotton from the Confederate states during the Civil War, pursuant to a congressional authorization to regulate commerce with the rebel states by way of licenses. How this example could support an inherent authority to impose tariffs against third countries during wartime is unclear. In short, when the president’s foreign affairs powers do overlap with Congress’s foreign commerce powers, Congress prevails.

So, while the Supreme Court in Learning Resources expressly left open the question whether the president might be able to impose tariffs pursuant to his constitutional warmaking powers, the historical record from the years immediately after the Constitution’s ratification suggests that the answer to that question is that he cannot.