Anyone who picks up a copy of the Constitution these days might be confused about tariffs.
Just read Article I, Section 8, which says, “The Congress shall have power to lay and collect taxes, duties, imposts and excises, … but all duties, imposts and excises shall be uniform throughout the United States.”
Congress has this power, not the president. Yet, over many years, Congress has passed laws ceding that power to the president. While this power has been exercised in various ways by many presidents, President Trump has made it a centerpiece of trade and foreign policy.
Some conservatives want to restore the original balance, gently.
A tariff law?
In a recent interview, Utah Sen. John Curtis told me he had “floated” the idea of a law, passed by Congress, codifying a tariff rate. For one thing, he said, such a thing could have made a difference in the revenue projections surrounding the large omnibus budget bill recently signed into law.
“Hypothetically, let’s pick, like, a 10% worldwide tariff,” Curtis said. “That would raise pretty substantial dollars, and if we codified it, the Congressional Budget Office would include it in their projections, versus right now — they’re not including it because how do you include it? It’s up and down, it’s on, it’s off. But if we codified it … conceivably, that’s as much as a tenth or a fifth of our deficit spending per year.”
Curtis said his idea “wasn’t very popular.” In any event, it would have required a super majority to overcome a likely veto.
But he is concerned that the founders’ intent concerning tariffs is being lost.
“It’s easy to see now how the power we ceded decades ago is not good,” he said. “One person deciding worldwide economic conditions – nobody foresaw that. I think we can all agree we need to rein that back in, but how we rein it back in and when we rein it back in is not a simple thing.”
Two lawsuits
Other conservatives and liberals are actively looking for ways to rein it back. Two lawsuits are wending their way toward the Supreme Court. In one, the conservative Goldwater Institute in Arizona filed a friend of the court brief opposing broad presidential tariff powers. On the think tank’s website, Timothy Sandefur wrote an essay that reminds readers of the experiences that shaped the nation’s founders. Like many analysts, he equates tariffs with taxes on American consumers.
“The American founders were well aware of the risks involved in the executive branch unilaterally imposing taxes with the stroke of a pen,” he said. “That power, after all, had been abused for a century before the American Revolution, by British monarchs such as James I and Charles I. They sought to impose so-called ‘prerogative taxes’ so that they could fund their activities without having to ask Parliament for money. The consequence was a century of civil war in England, which resulted in the overthrow of two kings before 1690.”
The nation’s founders
These experiences were top of mind when the framers drafted the Constitution, Sandefur said. They “sought to ensure that the taxing power would forever remain exclusively in Congress’s hands. They gave it, and it alone, the power to establish taxes and tariffs.”
He quotes James Madison, who wrote in the Federalist Papers, “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.”
Regardless of how you feel about tariffs, on a practical level, the up-and-down tariff threats in recent months have given businesses the one thing they hate most: uncertainty. Curtis said if Congress passed a law setting a rate, it would “calm the markets down.”
Tariff refunds?
If you want the opposite of calm, imagine what might happen if the Supreme Court ultimately strikes down the president’s power to enact tariffs.
An analysis by Thomson Reuters said it “could usher in a wave of duty refund claims and severely curtail the executive branch’s ability to unilaterally reshape trade policy.”
On the other hand, a ruling in favor of the president could give the president powers never envisioned by the founders.
Either way, these court cases are worth watching carefully as Trump’s second term unfolds.