The Legal Case Against Tariffs
Comparisons to the legal case against student debt relief
Abstract: The Biden Administration’s decision to use the Heroes Act to seek an extremely broad discharge of student debt and the Trump Administration’s decision to use the International Emergency Economic Powers Act to raise tariffs are both examples of an aggressive executive usurping powers granted to Congress. The Supreme court ruled against the Biden effort to expand student debt relief and should do the same to the Trump expansion of tariffs.
The Wall Street Journal has reported that one lawsuit has been filed and other lawsuits will follow challenging the Trump Administration’s authority to impose tariffs without Congressional approval.
The Constitution gives Congress the authority to impose taxes and tariffs.
Trump bypassed Congress and imposed a broad arrange of tariffs by invoking the International Emergency Economic Powers Act, a law giving the president broad authority to regulate foreign commerce to deal with “unusual and extraordinary” threats against national security or the economy.
This law had been previously used to impose economic sanctions on nations, to punish terrorists and criminals, to limit the flow of fentanyl, and to reduce the sale of oil supporting the regime in Venezuela. The law has never been used to set tariff rates on a broad range of countries.
The recent imposition of tariffs is not the first time a president has invoked a law claiming a national emergency to bypass the authority of Congress. The Biden Administration invoked the Heroes Act, a 2003 law giving the Department of Education the authority to waive or modify student debt obligations, in response to a perceived national emergency. The actual emergency used by the Biden Administration to justify extremely broad debt relief was the Covid Pandemic, even though the pandemic was essentially ending when the debt relief was authorized.
The court in a 6-3 decision ruled that the Biden Administration did not have the authority to provide debt relief under the Heroes Act.
The decision aligned the six conservatives against the three liberals.
Chief Justice Roberts, in his decision for the majority, stressed the need for Congress to sign off on such a broad policy change.
“I think most casual observes would say, if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on’
The Biden Administration might have been able to get smaller more targeted changes through the Heroes Act. However, the remedies sought by the Biden Administration were expansive and expensive.
I have argued elsewhere that current student debt policies are deeply flawed. However, there is no national emergency sufficient to justify the imposition of fundamental change to student borrowing norms.
The Trump tariffs are similarly expansive and expensive. Former Vice President Pence characterized the Trump tariffs as the largest peacetime tax increase in history.
Trump imposed a 10 percent tariff on all countries in the world and higher tariffs on 57 nations including allies.
There is no “unusual or extraordinary” threat to national security or the economy to justify these levies.
The economy and markets were strong until the tariffs were imposed.
The argument that fentanyl inflows justify punitive tariffs on Mexico, Canda and China seems overblown, as discussed here. Very little fentanyl enters the country from Canda, Mexico and China are taking some steps to stop the inflow, and most of the problem is due to domestic demand.
The Trump team is explicitly using the fentanyl crisis to justify higher tariffs, which are then used as a bargaining chip for tariff concessions from other nations.
The Trump tariffs and the Biden student debt relief are examples of faux national emergencies used to justify changes to economic policy. A 6-3 conservative majority found there was no reason for the Biden Administration to usurp Congress on student debt. The shoe is now on the other foot. How will the courts rule?