What now?

Can Trump salvage his tariff policy after losing his appeal? Are there other ways to achieve similar goals?

The US Court of Appeals for the Federal Circuit, in a ruling published on Friday afternoon, determined that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose the ‘fentanyl’ and ‘reciprocal’ tariffs was contrary to the law. The court allowed the tariffs to remain in place until October 14 to give the government time to appeal to the Supreme Court, which Attorney General Pam Bondi said they will.

The Supreme Court will almost certainly take up the case as it pertains to an important constitutional question of which branch of government has the power to set tariffs. While the Constitution gives Congress the authority to tax and spend, Congress has over time delegated to the President some powers to set tariffs. Specifically, in the current context, the IEEPA gives the President the power to “regulate” trade in the event of an emergency and the White House used this to claim it has the power to set tariffs on all US trade partners.

The Court of Appeals decided otherwise. The majority opinion decided that the power to ‘regulate’ does not include the power to ‘tax’ — these powers are conferred separately on Congress in the constitution. While President Nixon had been able to use the IEEPA’s precursor legislation — the Trading with the Enemy Act (TWEA) — to impose across-the-board supplemental tariffs of 10% in 1971, the Court of Appeals yesterday noted that those tariffs were limited in time (they were removed five months later) and scope (only applying to goods that had been subject to tariff concessions) and the surcharge raised tariff rates only up to a ceiling that had been set by Congress. Trump’s ‘reciprocal’ tariffs, in contrast, are intended to be permanent, are universal, and include rates that have not been approved by Congress.

The White House claimed precedent in The United States v. Yoshida International in which the United States Court of Customs and Patent Appeals ruled that the power to “regulate importation” did include the power to set tariffs that were a reasonable response to the particular national emergency declared. The Appeals Court ruled on Friday that this precedent does not apply in this instance because the White House was claiming unlimited powers to set tariffs. In essence, Trump’s tariffs are unreasonably high and broad and only Congress should have the power to set such tariffs.

So the case will go to the Supreme Court. I think there’s a good chance the Court will uphold the government’s appeal. I think a majority may decide that, while the power to “regulate” trade and the power to set taxes are indeed separate, Congress has transferred the latter to the President under the IEEPA and other Acts. The Supreme Court will likely agree that it is not any court’s role to challenge the President’s determination that the size of the US trade deficit constitutes a national emergency. Are the ‘reciprocal’ tariffs a “reasonable” response? The Court may similarly decide that that is not up to them to determine.

If the Supreme Court upholds the White House’s appeal of Friday’s ruling then nothing changes. The tariffs put in place in August will remain, as will Trump’s power to raise or lower these tariffs as the perceived (by him) emergency waxes or wanes.

If the Supreme Court rules against the White House, upholding the Appeals Court’s finding of Executive overreach, then things get interesting. How might Trump find other powers to replace these tariffs or other policies to achieve similar goals?