In a big victory for environmentalists, the U.S. Court of International Trade in New York ruled that… It ruled that former President Donald Trump’s tariffs on China and other countries were illegal. The court found that these tariffs exceeded the authority Congress gave to the president. The authority for this staggering decision rests under the International Emergency Economic Powers Act (IEEPA). Despite this historic ruling, the court’s decision did not result in the immediate removal of these tariffs, meaning that they will remain in place in the interim. This decision comes against a backdrop of rising tensions over U.S. trade policy, especially as it relates to drug trafficking and immigration.
Trump instituted these tariffs to stop the tide of drugs and immigrants streaming into the United States. This decision was not just arbitrary; it was aimed at implementing a tactic to bolster security along the border. To excuse his illegal actions, he wrongfully declared a national emergency. He cited the U.S.’s 49 straight years of trade deficits as justification for his decision. Initially, the tariffs were meant to coerce the countries into compliance on unfair trade practices and providing security on their own borders.
The legal basis for Trump’s tariffs was rooted in the IEEPA, a statute that allows the president to impose economic sanctions during national emergencies. Yet this act is one of our oldest transportation acts, dating back to 1977. Its legal underpinnings stretch back to old legislation, like the 1917 Trading With Enemy Act employed during World War I. Trump’s administration argued that his approach was similar to the emergency measures employed by President Richard Nixon during an economic crisis in 1971.
Trump’s trade war was conducted through two separate but complementary sets of import taxes- Section 232 and Section 301 tariffs. They impacted both countries with trade deficits and countries with trade surpluses with the U.S. By August 2018, Trump began to put these adjusted tariff rates into practice. This unilateral action immediately drew condemnation from international and US stakeholders alike.
These tariffs continue to wreak havoc through markets worldwide. This has led many people to fear them—or worse, cause them—to lead to higher prices and slow, stifled economic growth. The Trump administration’s aggressive tariff policy has alienated key U.S. trading partners and allies, raising concerns about potential retaliation and long-term economic consequences.
In July 2020, Trump’s tariffs raked in an eye-popping $142 billion. This was more than a double from revenue in the same time period last year. Many economists and economic policymakers were surprised by the financial jolt. It did raise important questions about the broader implications of any proposal to raise import taxes by such a large amount.
According to experts such as former US Trade Representative Michael Punke, the ramifications of the court’s judgment against Trump’s tariffs could go far beyond the legal realm. Ashley Akers noted that “while existing trade deals may not automatically unravel, the administration could lose a pillar of its negotiating strategy.” She described how this loss would embolden adversarial foreign governments. As a result, they can be expected to resist any future requests and defer meeting their past pledges.
The Trump administration’s aggressive use of tariffs and trade policy wasn’t all bad. The former president repeatedly pointed to catastrophic predictions of what would happen economically if we lifted tariffs. He even warned, “It would be 1929 all over again—a GREAT DEPRESSION!” He likewise doubled down on his conviction that tariffs are needed to defend American jobs and industries.
The continuing, and now escalating, legal battles over Trump’s tariffs are symptomatic of this larger debate over the bounds of executive power in trade policy. Finally, critics contend that overbroad use of emergency powers erodes important checks and balances. At the same time, advocates feel like these measures are necessary to make sense of the changing landscape of global trade conditions.
While the Biden administration has only recently taken office and is only now dealing with the fallout from Trump’s tariff policies. Simultaneously, it has been developing its own playbook for global trade. This recent court ruling should encourage policymakers to reconsider their prevailing trade approaches. Or they could find new ways to combat global trade imbalances and confront illegal and unfair practices.
