American Airlines stock fell below its lowest level from the depths of the pandemic during trading today. The economy is teetering on recession. $6 trillion in wealth was wiped out by the announcement of sweeping tariffs this week.
Yet, somehow, the CEO of United Airlines is supportive of the effort – even though it’s going to wipe passenger and cargo demand from his airline, and disrupt aircraft supply chains.
Fortunately, the courts could save us – if only they acted quickly enough. The first lawsuit (Simplified vs. Trump) has been filed against the President’s tariff authority under the 1977 International Emergency Economic Powers Act by the New Civil Liberties Alliance.
The complaint emphasizes that the International Emergency Economic Powers Act nowhere explicitly mentions tariffs or any authority to tax American imports. IEEPA has been used in the past for asset freezes, sanctions, and embargoes against foreign actors (terrorists, hostile regimes)—not for imposing a broad tax on domestic companies that import goods.
Because tariffs are a “major question” of both “vast economic and political significance,” the plaintiffs argue that the President would need a clear, explicit delegation from Congress which is not found in the statute.
Under IEEPA, any presidential action must be “necessary” to address the specific “unusual and extraordinary threat” the President has declared. Here they’re challenging tariffs on China imposed in February under the bizarre claim that these are necessary to fight fentanyl and opioids coming into the United States. However there is no logical nexus between an across-the-board tariff on Chinese imports and curbing opioid smuggling. (Indeed, the tariff applies to items brought into the country legally.)
The real reason for the tariffs – in the President’s own telling – is trade deficits and revenue. But the exclusive power to levy taxes and regulate foreign commerce lays with Congress under Article I, Section 8 of the constitution. Transferring a part of that power to the executive must entail an “intelligible principle” that constrains how the president can exercise it.
- The lawsuit argues that if IEEPA were read to permit unilateral tariff-setting in the name of an “emergency,” then that reading would violate the nondelegation doctrine because it effectively gives the President open-ended power over foreign commerce.
- Further, Congress has already enacted Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act governing how and when presidents can impose duties. These lay out procedural requirements (investigations, public hearings, findings, etc.) that haven’t taken place, so the President is not only exceeding authorities granted by Congress he’s short-circuiting limits placed on his own authority.
- The tariff power is granted to Congress and not to the President, and Supreme Court precedent is clear that the executive can only impose tariffs where Congress has explicitly permitted it.
That [C]ongress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the [C]onstitution.”
— Marshall Field & Co. v. Clark, 143 U.S. 649, 692 (1892)
The plaintiff in this case claims standing from direct economic harm caused by raising the cost of importing goods from China, which reduces their profits.
Since IEEPA has never before been interpreted or used to impose universal tariffs, and no president in its nearly 50-year history has attempted it, there’s a strong case that the statutory basis behind the tariffs is flawed.
And the Supreme Court has been especially skeptical of claims of “vast” new executive powers in old statutes unless Congress spoke with unmistakable clarity. The lawsuit’s reliance on the major questions doctrine is a direct way to argue that “IEEPA plainly doesn’t allow new forms of taxation.”
IEEPA does authorize the president to “regulate … transactions” involving foreign countries when an emergency is declared. The administration may argue that “regulate … transactions” or “import restrictions” is broad enough to encompass something functionally akin to a tariff. So the plaintiffs will have to show that a “tax/duty” is different. That shouldn’t be hard, since there are specific procedures for tariffs outlined by Congress which weren’t followed here either, and legislative language clearly refers to tariffs when those are included (and no one ever thought they were included in this status for 50 years until this administration now).
Getting a Court to enjoin the President – prior to reaching the Supreme Court – may be difficult. The legal merits of this case seem strong but that doesn’t mean it’s a silver bullet to end the current crisis. However, the New Civil Liberties Alliance successfully drove the Loper Bright case which struck down Chevron deference last year – so they’re serious.
That said, this suit is against the President’s exercise of questionable tariff authority from February and the sweeping tariffs announced this week are far more vulnerable to challenge – they are a much bigger “major question” that the Supreme Court will have a harder time backing away from given recent decision-making around Congress’ role in decisions of this size and scope.
And there are other areas of attack that will come up in challenges to these broader tariffs. The statute the administration is relying upon requires an “unusual and extraordinary threat” and an actual declaration of a national emergency (where it is hard to justify a national emergency in any case).
This lawsuit is horse shit. Tariffs do and will work.
@David R Miller the effectiveness of tariffs is not at issue in the lawsuit, what is bull is claiming tariffs are useful to stop fentanyl smuggling from China
@David R Miller – ironically, powdered Kool-Aid is imported from Canada. So your cost is going up.
The new tariffs is not necessarily bad.
Outcome 1: Other countries stop r4aping America and lower trade barriers. That would be a good outcome.
Outcome 2: Other countries do nothing and some production returns back to the U.S. That would also be a good outcome.
Outcome 3: Other countries do nothing but companies think the US presidential term is only 4 years so they will wait it out. That would be a bad outcome.
Outcome 4: Inflation increases but there is no coherent strategy for Day 2. That would be a bad outcome.
Cry me a river. As if US ever had the eighth and ninth freedoms of the air. U.S. law prohibits these cabotage operations.
How will we survive? We can’t buy the cheap crap from Temu and Shein made from slave labor in China.
But don’t worry the same judge shopping that has been taking place the last few weeks will locate a good Democratic appointed judge who will issue a stay.
@ David R. Miller — You really should turn off FoxNews. They are the only media outlet that still claims these moronic policies are a good idea.
I think even if the plaintiff “won” the case Trump might just pull an Andrew Jackson and defy the courts on this issue. Tariffs have been his biggest political issue for nearly 40 years. He believes that his life was spared twice so that he could address his two pet issues of immigration and tariffs. Congress could try to pass resolutions of disapproval or even impeachment if he defied the courts, but there are not enough Senators who oppose him to reach a 2/3 majority to override a veto or sustain a conviction (even the Jan 6 impeachment trial only got 57 votes). He has already gotten his Cabinet nominees approved, so Congress is now mostly toothless and the courts are therefore at his mercy as well. The will to power is stronger than the rule of judicial law.
@ Gary — There was zero wealth wiped out. It was never there. All smoke and mirrors..
@Gene – that isn’t true, there were goods that would have been shipped that won’t be, products that are now more expensive to complete, things that become less affordable – so the businesses employing people to make them won’t be sustainable any longer. we’ll have much less prosperity from this.
“The plaintiff in this case claims standing from direct economic harm caused by raising the cost of importing goods from China, which reduces their profits.”
LOL. The plaintiff will be found to have no standing. An importer can’t choose to harm themselves and then sue someone else for it. Don’t you understand how tariffs work? The foreign exporter has to pay the tariff to the U.S government. A U.S importer could choose to pay the tax instead of forcing the foreigner to pay it… but the importer has NO OBLIGATION TO PAY IT. If he stupidly pays a tax so a foreign country doesn’t have to, then the importer has chosen to harm himself.
Case dismissed.
Remember, the reason some of the foreign goods are so cheap is because slaves produce them.
Are you pro-tariff, or… pro-slavery ?
We will see if the judicial branch wants to take more control of the executive branch.
@Lindy that is dumb, slavery in the U.K. and Singapore? And Australia?
I never imagined I’d run into the infamous David Miller here. It is a small world.
Blanket Tarrifs do not work all you have to do is look at our history when we tried that before. Trump’s numbers are made up BS. He counts the EU’s VAT tax as a trade barrier. That would be like the EU telling us state and local sales tax can no longer be applied to EU imports and you can only add those taxes for domestically sourced products.
Cheerleaders like David Miller got in bed with Trump. Trump the bed and now the David Millers of the world will have to walk around for the next few years covered in orange .
It’s terrifying when we have to rely on the courts to keep our king from destroying our economy. There’s a reason that every non-fringe economist is terrified right now. That’s quite a change from six months ago when the economy was booming, our allies liked and respected us, we were a trustworthy nation, and our enemies feared us. Now every one of those points is reversed.
The sky is falling, the sky is falling, run, hide it’s over, we’ll never recover !!!
The big problem with all of this is the body who should be standing up – congress – is rolling over. There is a reason the US is the richest and most successful country in history and much is down to checks and balances. But all great civilizations end so maybe that’s where we are
The theory behind the China tariffs isn’t that we’ll tax drugs out of business. Rather, it’s a diplomatic wedge — do more to restrict the export, and we’ll pare back the tariff. And there’s no question China could do more to curtail drugs, for starters they could stop their known operations in SE Asia (particularly the Phillippines).
That doesn’t mean it’ll work, just this is the actual theory.
Of course they’re doing it in typical Washington hamfisted fashion. If they were serious about it, the China tariff would be accompanied by tariff reductions to Japan, South Korea, India, SE Asia, etc., to entice companies to decouple operations from China; and reductions to the various Belt-and-Road countries around the world that China is turning into colonies.
Is this an anti Trump, elect Harris blog or an airline bog? I used to back you up when others were critical. But this post is truly ridiculous. Will we survive? I can say if we had 4 more years of the Dems running or pretending to run the government, it be a world war. Didn’t help Israel and inflation, inflation and more inflation. You’ll see this will all turn around. Buy some airline stock. I did , $20k today of United and delta mix. Can’t wait to cash in . Keep crying, gary. We won , remember?!? People spoke
@ Gary — Fair enough, but this will be over with in a few weeks, once the market drops to their target level. I wish I knew that number. I’m sure Peter Navvaro is a big enough idiot to blab about it on TV.
@ derek — Except these countries are NOT raping America. That is just a stupid talking point.
For a mostly fentanyl-free flight, please choose Delta.
@Randy. I have to disagree with you. The men’s lace thong panties from Temu are really quite comfortable. I’d recommend you get 6 for $5.00 before the prices go up. And this is a serious post!!
Inquiring minds want to know if Señor Leff has regrets about not having voted in the 2024 general election for Harris-Walz?
@Lindy
The biggest slaves are those mindlessly following the Orange Felon
@Lindy
I would suggest learning trade 101. The importer pays the tax on an imported good. Perhaps watching Fox news isn’t helpful in really learning anything.
You are getting exactly what you voted for Gary, or at least what you didn’t vote against.
You have to be a complete and utter moron to believe the big buffoon that tariffs are good. They are terrible and will cause horrific pain. This is literally the dumbest idea of any President in history. Trump.. making America poor again. Clueless dumb f*.
Trump literally inherited the greatest economy only to flush it all down the toilet.
I hope you Trump People are happy with this Mess you have created!
Well said. I’m a Republican and have no clue what the current administration is doing other than it’s likely illegal. Shoot first then aim is not a strategy. I get the border crisis in Mexico plus Fentanyl, but claiming the same thing against Canada is silly and looks bad because it’s simply not true.
Yet, this is where we are. The best way to affect change is to stand up to our leaders when they make mistakes. And yes, work together. It’s still a thing.
Jon
@GUWonder – Ah, the Golden Age of half a year ago. There’s already a fair amount of buyer’s remorse happening from the election and it’s going to get much worse. What will be interesting to see is how less educated blue collar workers are going to somehow try to rationalize the king making their lives considerably worse through diverting monies from things that benefit the public to handing billionaires more money, accepting lower wages, enduring higher costs, and living with notably poorer financial outlooks. I suspect they’ll somehow attempt to scapegoat the political left because that’s easier than accepting blame themselves. Elect a clown expect a circus.
Keep your head. It’s only been one day. Your discomfort may indicate some effect…
I’m not an economic expert nor do I play one on the Internet.
But nobody’s talking about the fact that these actions will in effect reduce the tariffs on American exports , these can be negotiated with each country and because we have a trade deficit with pretty much every country, we have a very good leverage to negotiate these rates. So you will see a lot more American exports, which will create more jobs which will be very good for the economy.
All the people whining about judges overruling the executive branch might want to look back at what they thought when judge Kathyn Kimball Mizelle struck down the Biden administration’s mask mandate or when Matthew Kacsmaryk tried to ban the abortion pill nationwide.
You can’t undo decades of globalization with some tariffs. I still think he’s going to blink and remove them in a few weeks. Makes for a crazy market. I don’t even know if it’s going to be safe for US citizens to travel to Europe this summer. I’m off to the local TESLA protest..