The Editorial Board of the Wall Street Journal is correct that no U.S. president possesses monarchial powers to impose tariffs. Two slices:
In a ruling heard ’round the world, the U.S. Court of International Trade on Wednesday blocked President Trump’s sweeping tariffs. This is an important moment for the rule of law as much as for the economy, proving again that America doesn’t have a king who can rule by decree.
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No other President has used IEEPA to impose tariffs. As the trade court explains, Richard Nixon used the law’s precursor, the Trading With the Enemy Act, in 1971 to impose 10% tariffs for a short period to address a balance of payments problem. The Justice Department said Mr. Trump’s tariffs are no different.
Not so. As the panel notes, Nixon tariffs were upheld by an appeals court because they were a “limited surcharge” and “temporary measure calculated to help meet a particular national emergency, which is quite different from imposing whatever tariff rates he deems desirable.” The latter is what Mr. Trump did, at one point jacking up rates to 145% on China.
GMU Econ alum Dominic Pino is rightfully thankful for libertarian law firms. Two slices:
On April 2, Donald Trump unilaterally imposed tariffs on all imports, in violation of the Constitution. The law he cited to do so, the International Emergency Economic Powers Act, had never before been used to impose tariffs. Article I of the Constitution clearly grants the tariff power to Congress, which was not involved in creating the original policy.
The unconstitutionality was plain as day, but the president went through with the policy anyway. The question became: Who will do something about it?
One might think Congress would. Its authority was usurped, and it has the legislative power to do something about it. It could assemble a veto-proof majority to force the president’s hand.
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The the Trump administration lost at the U.S. Court of International Trade was brought by Liberty Justice Center. Another case challenging the tariffs was brought by the Pacific Legal Foundation. Yet another was brought by the New Civil Liberties Alliance (NCLA). All three of these libertarian public-interest law firms are doing jobs that others should have done but didn’t; namely, challenging blatantly unconstitutional actions by the president.
Pacific Legal has been around since 1973, but Liberty Justice Center and NCLA are both less than 20 years old. They have sprung up in response to the government’s tendency to behave unconstitutionally until being told not to by the courts. And for the courts to have a chance to do that, someone needs to sue.
Conservatives have rightly praised the efforts of groups such as the Federalist Society in shaping the judiciary and the actions of originalist judges in shaping the law. The less acknowledged heroes are the libertarian law firms that find and represent the plaintiffs that make these cases possible in the first place.
Eric Boehm exposes the foolishness of Trump & Co.’s assertion that the administration’s tariff ‘policy’ is being derailed by judges ruling inappropriately. A slice:
By reviewing the actions of the executive branch to ensure they comport with the underlying law, the Court of International Trade merely fulfilled the constitutional role of the judiciary.
“This ruling reaffirms that the President must act within the bounds of the law, and it protects American businesses and consumers from the destabilizing effects of volatile, unilaterally imposed tariffs,” Jeffrey Schwab, senior counsel at the Liberty Justice Center, the public-interest law firm that represented the plaintiffs in the lawsuit before the Court of International Trade, told Reason in a statement.
Wall Street Journal columnist Kimberly Strassel is justly critical of JD Vance’s criticism of Chief Justice John Roberts. A slice:
If the British coined the term “too clever by half,” Vice President JD Vance might own the political update of “too smart by 99%.” And Donald Trump might wonder at what point he asks his veep: Please stop helping—at least when it comes to Mr. Trump’s greatest legacy and biggest asset, the U.S. Supreme Court.
Mr. Vance recently offered his own take on the “role” of that body, in particular Chief Justice John Roberts’s “profoundly wrong sentiment” that the judiciary exists to “check the excesses of the executive.” The vice president finger-wagged that this was “one-half” of the job; the “other half” was to stop a “small but substantial number” of courts from telling “the American people they’re not allowed to have what they voted for,” namely “immigration enforcement.” Also, to be “extremely deferential” to the “political judgment” made by “the people’s elected president of the United States.”
Mr. Vance did at least preface his comments with a warning that they may prove “inflammatory”—before inflaming away.
Students of law—or of, well, grade school—no doubt quickly picked up on the first problem. The foundation of the U.S. system is the constitutional separation of powers, checks and balances. Congress has the purse. The executive has the sword. The judiciary’s power is to settle “all Cases” and “Controversies” “arising” under the Constitution and other laws. Far from being “profoundly wrong,” Chief Justice Roberts’s sentiment was profoundly basic. To have a court that jumps to the will of a president or a changeable voting majority is to have . . . Venezuela. Mr. Vance, a Yale Law School graduate, surely would have disapproved of the court’s rubber-stamping Joe Biden’s student-loan forgiveness or vaccine mandates—even though Mr. Biden won an election.
Gary Winslett, unfortunately, is correct: “Trump’s trade war isn’t over yet.” A slice:
Finally, there’s a third option that might appeal to Trump’s political instincts: embrace victimhood while privately celebrating the outcome.
He could rail against “activist judges” blocking his manufacturing revival, giving his base the red meat it craves while privately welcoming a ruling that saves him from economic chaos. He gets to blame courts for any failure to restore Rust Belt glory while avoiding the market turmoil and price spikes that would have accompanied his tariff blitzkrieg. It’s the ultimate have-your-cake-and-eat-it-too scenario: Trump maintains his protectionist brand without suffering the economic consequences. Meanwhile, markets rally, inflation stays manageable, and Trump can focus on other priorities while pretending the courts robbed America of the greatness he was trying to restore. Political theater meets economic pragmatism.
For the sake of our economy, let’s hope he picks Option 3.
Newly minted GMU Econ alum Caleb Petitt – writing today at National Review – explains how the cronyist and protectionist Jones Act weakens U.S. national defense. A slice:
Despite itself, the Jones Act requirement that cabotage (shipping goods between ports within the country) be done with domestically built ships has crippled America’s ability to maintain its merchant fleet. The fleet has declined from 199 vessels in 1990 to 82 vessels in 2017. The American military would need the merchant fleet to transport equipment in a war, but with each passing year the fleet is less capable of meeting that need.
One solution to our current abysmal situation would be to relive the glory days of the U.S. Maritime Commission in World War II: Sound the alarm, have the government fund ship production, get competitive contracts from a variety of private entities, and repeal regulations to expedite the production of more ships and shipyards. But there is little reason for such drastic measures.
A simpler solution would be to allow American shipping companies to buy foreign-built ships for cabotage. The Jones Act is entirely imprudent, but the domestic-building requirement is especially harmful to the American merchant fleet by limiting access to cheaper vessels.
If the domestic-production requirement were dropped, America could supplement its merchant fleet with cheaper, foreign-built vessels. Buying foreign ships would not help increase American shipbuilding capacity, but it would enlarge the fleet. Domestically built vessels are eight times more expensive than comparable foreign-built ships.
Here’s wisdom about trade from GMU Econ alum Jon Murphy. A slice:
But the reality is that trade, all trade, ultimately occurs between individuals, not countries. The United States is not trading with Mexico. A firm in Dallas is trading with a firm in Mexico City. Consequently, while countries in the aggregate may have some sort of market power, individuals mostly do not. The actual ability to pass on a tariff, or to force a foreign supplier to pay a tariff, is limited to non-existent.
But isn’t this the point of tariffs? To “collectively” negotiate for all? Can’t we apply the same logic here to the “firm” called The United States? Alas, no. A country is not a firm. Short of outright socialism, the president is not negotiating for inputs for American firms. The firms are still the ones making buying decisions. It is their ability to pass on prices, not some fiction called “The United States Company,” that matters.
Not that any more such evidence is needed, but here’s more evidence that foreigners will not “eat” Trump’s tariffs: “Gap shares plummet as retailer says tariffs will cost hundreds of millions.”
Benjamin Zycher applauds “the ongoing collapse of the climate litigation game.”
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Markets, whether for cheap consumer goods or government bonds, can’t be bullied into compliance with a political agenda. They aren’t governed by the philosophies and desires of men like Mr. Vance. They are governed by the laws of economics the way the physical world is governed by the laws of gravity. You can moan about them all you want, you can lament the trade-offs they demand and the constraints they impose, but you can’t ignore or wish them away. No amount of political will or spilled ink can overrule them. Supply and demand are undefeated.
The moon landing is a bizarre symbol of the new hope for industrial policy because we never got any industry. We placed a flag on the moon and then traveled back.
When people trade, they work together even though they might not know (or care) about the other person’s goals. Think about this the next time you’re at a Walmart Supercenter. You get oranges? Where did you get the money? Maybe you work at a coffee shop where accountants hang out. Where did the accountants get the money they spent on the coffee? Maybe they audited Walmart’s financial statements. Where did Walmart get the money to pay them? They got it by selling oranges to you. Everyone gets what they want: accountants get coffee, you get oranges, and Walmart gets audited financial statements.