Is Trump’s New Tariff Lever IEEPA 2.0?

In February, the Supreme Court invalidated Trump’s International Emergency Economic Powers Act of 1977 (IEEPA) tariffs, which imposed tariffs of 10 percent or more on almost all U.S. trading partners. The imposition of the import duties left us with the highest tariff rates since those that severely exacerbated the Great Depression and would have resulted in some $1.4 trillion in new taxes for Americans over the next decade. In a case I helped develop and litigate, the court’s 6–3 decision held that IEEPA does not authorize tariffs and that the president could not legally claim unlimited tariff authority. With the new Section 301 tariffs, Trump seeks to circumvent the Learning Resources v. Trump decision and once again enact a broad trade war without congressional authorization.

The forced-labor pretext.

Unlike IEEPA, Section 301 does authorize tariffs. But it sets limits that Trump’s policy blatantly transgresses. Section 301(b), the provision Trump is relying on, allows the U.S. Trade Representative (USTR) to impose tariffs if it finds, after an investigation, that “an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce.” In this case, the USTR claims the offending policies relate to the importation of goods supposedly made by forced labor.

In a recent Dispatch article, my Cato Institute colleague Scott Lincicome explained why the forced-labor “investigations” the administration claims justified the Section 301 tariffs are a sham. As he noted, the conclusion of the investigations was clearly predetermined, the tariffs imposed have no real connection to any genuine forced-labor issues, and many of the countries subject to the new tariffs actually have tighter restrictions on goods produced by forced labor than the U.S. itself does.

Administration officials stated publicly the goal was to use Section 301 to reestablish the tariff regime struck down by the Supreme Court. In addition, the Section 301 tariffs are similar to the temporary tariffs—based on Section 122 of the same trade act—that expired in late July and were rightly invalidated by the U.S. Court of International Trade in May (although appellate litigation continues). Furthermore, the USTR outlines no steps trading partners can take to get the tariffs lifted. This violates the requirement that Section 301 tariffs must be limited to obtaining the “elimination” of the unreasonable or discriminatory policies.

It is absurd to claim that wealthy, liberal democratic trading partners like Canada, Australia, Japan, South Korea, and the European Union are importing any significant amount of goods produced by forced labor in a way that meaningfully burdens America.

Major questions and nondelegation.

The new Section 301 tariffs also run afoul of the major questions doctrine, which requires Congress to “speak clearly” when authorizing the executive to make decisions of “vast economic and political significance.” At the very least, Section 301 does not clearly authorize the president to start a trade war against almost all our major trading partners on the basis of a sham investigation and dubious pretexts.

The Section 301 tariffs undoubtedly implicate the major questions doctrine. The Tax Foundation estimates the Section 301 tariffs will impose some $629 billion in new taxes on Americans over the next decade. Like the IEEPA tariffs, they are likely to significantly reduce income and economic growth. These potential effects are larger than those of any of the previous policies the Supreme Court has determined to be major questions, with the exception of the IEEPA tariffs themselves. (In that case, three of the six justices in the majority relied on the major questions doctrine.) The new tariffs outstrip even President Joe Biden’s sweeping student loan forgiveness program, which involved some $400 billion in unauthorized expenditures and was invalidated by the Supreme Court in 2023 in large part because it ran afoul of the doctrine.

In his dissenting opinion in the IEEPA case, Justice Brett Kavanaugh argued that the major questions doctrine does not meaningfully apply to “foreign affairs” issues. But there is no such distinction in Supreme Court precedent. Several previous major questions decisions involved policies with a major foreign affairs dimension. Most obviously, in West Virginia v. EPA (2022), the court denied the Environmental Protection Agency authority it claimed it needed to fight global climate change, an issue with obvious major international dimensions.

In addition, tariffs are far from a pure foreign affairs issue, because they are paid by Americans both in the legal sense that U.S. importers make the actual payments and in the economic sense that Americans bear the lion’s share of the actual costs. Multiple studies show that more than 90 percent of the cost of the IEEPA tariffs was borne by American businesses and consumers, and the Section 301 tariffs are unlikely to be much different. In any event, in the IEEPA case, the U.S. Court of Appeals for the Federal Circuit clearly ruled that the major questions doctrine applies to tariffs and used it as a basis for its ruling invalidating the tariffs. Federal Circuit decisions are binding precedent for the U.S. Court of International Trade, the trial court that hears all cases relating to challenging tariffs.

Even if the courts conclude that Section 301 authorizes these new tariffs, they should also rule that their imposition violates the constitutional nondelegation doctrine, which limits the delegation of legislative power to the executive. Tariffs are a specifically enumerated congressional power. The Supreme Court’s nondelegation precedent is far from completely clear, but last year’s decision in FCC v. Consumers’ Research held that delegations of the power to impose taxes and other financial levies must have a clear floor and ceiling and that “[t]he guidance needed is greater when an agency action will affect the entire national economy than when it addresses a narrow, technical issue.” There is, pretty obviously, no meaningful floor or ceiling under the administration’s approach to Section 301. And the authority claimed by Trump is certainly one that affects the “entire national economy.”

Moreover, at least from an originalist point of view, the power to tax has special status when it comes to nondelegation. The framers of the Constitution were especially careful to reserve it for the legislature to ensure that the president would not be able to repeat the abuses of English kings like Charles I, who had imposed “ship money” taxes without legislative sanction. In addition, as Chief Justice Roberts emphasized in the IEEPA ruling, the Founders were especially careful with the tax power, because they had “just fought a revolution motivated in large part by ‘taxation without representation.’”

Roberts found that the president does not have the power to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” He went on to note that while some statutes do grant the president tariff authority (among which he specifically cited Section 301), “[w]hen Congress has delegated its tariff powers, it has done so … subject to strict limits.”

Trump’s Section 301 power grab respects no such limits. If the president can use sham investigations designed to reach a predetermined result to impose the “forced labor” tariffs under Section 301, he can employ similar tactics to use the provision to impose virtually any tariffs he wants.

Rule of law and U.S. credibility.

In addition to the more specific legal issues at stake, the Section 301 tariffs—like the IEEPA tariffs before them—raise broader concerns related to the rule of law and America’s reputation and credibility.

If Trump can use IEEPA, Section 301, or some other statute to impose unlimited tariffs on any import from any nation whenever he wants, that makes this enormously important power subject to the whims of one person. Such unconstrained authority is inimical to the rule of law, which requires that major laws and regulations be set in advance by legislation and not subject to any one person’s total control. It thereby destroys the stable expectations businesses, investors, and consumers need to make their plans, imperiling the economy.

Relatedly, if the president can impose massive new tariffs at will, including by making utterly bogus accusations related to “forced labor,” the nation’s credibility with trading partners is damaged. Any trade agreement with the U.S. becomes essentially worthless, as the president can violate it at will. And businesses and governments would be foolish to commit to trade and investment in America, knowing those commitments could be imperiled any time the president becomes peeved about some issue. Over the last year, Trump has either threatened or actually imposed tariffs on major trading partners for ridiculous reasons: wildfires in Canada, the supposed threat of foreign-made movies, and the prosecution of Brazil’s former president for launching a coup to stay in power after he lost an election. In addition to the economic damage, such actions poison U.S. relations with key allies and make it more difficult to work together to counter adversaries like Russia and China.

Three lawsuits challenging the tariffs have already been filed: one brought on behalf of two small businesses by the Liberty Justice Center (the public interest law firm I worked with on the IEEPA case); one filed by several firms, including Learning Resources Inc., the toy manufacturer whose IEEPA challenge ended up before the Supreme Court; and—most recently—one brought by 25 state governments led by Oregon, which also played a key role in previous litigation challenging illegal Trump tariffs.

It is important that the courts continue to hold the line by striking down presidential tariff power grabs. And it is also desirable that they do so quickly. Judges can reduce the damage caused by illegal tariffs if they refuse to stay initial rulings blocking them.

The Federal Circuit’s stay of the initial ruling against the IEEPA tariffs enabled the Trump administration to collect some $166 billion in illegal tariff payments, greatly increasing the harm caused by the policy. Much of the harm caused by illegal tariffs—including lost sales, investment opportunities, and higher prices paid by consumers—cannot be fixed by giving tariff refunds later. Neither can the damage to the U.S. economy. And, as the IEEPA experience shows, even the refunds themselves are not a given. Billions remained unpaid five months after the Supreme Court’s decision, and the Trump administration is trying to avoid refunding some of the money.

In the long run, Congress should act to curb presidential tariff authority, ideally by eliminating or severely restricting all statutes that grant it. Enacting Democratic Sen. Ron Wyden’s proposed legislation to the latter effect would be a good start. Unless and until Congress acts, strong judicial review must continue to be a vital line of defense against illegal and economically destructive taxation imposed by the president.