Heading into Labor Day weekend, the news was abuzz with low gas prices, the ending of de minimis tariff exemptions, Kamala Harris’s secret service detail being nixed, and recent releases from the BEA on 2Q GDP figures and personal income and outlays for July. But then, a bombshell court ruling was handed down by the US Court of Appeals for the Federal Circuit in VOS Selections, Inc v. Trump. In a 7-4 decision, the Court affirmed the Court of International Trade’s previous ruling.
Briefly, the Court of Appeals invalidated both the “trafficking tariffs” on Canada, Mexico, and China for drug (fentanyl) issues and the “reciprocal tariffs” based on trade deficits. The Court affirmed that “tariffs are a tax, and the Framers of the Constitution expressly contemplated the exclusive grant of taxing power to the legislative branch; when Patrick Henry expressed concern that the President ‘may easily become king,’ James Madison replied that would not occur because ‘[t]he purse is in the hands of the representatives of the people’” and that “Absent a valid delegation by Congress, the President has no authority to impose taxes.”
Also in their ruling was the acknowledgment that the President does have wide powers during a national emergency, which may include temporary and targeted tariffs aimed at specific ends (for example, the additional 25 percent tariffs on India that were just enacted will probably withstand this ruling). The President cannot, however, simply declare a national emergency in order to expand the office’s power, especially over the federal purse, without clear Congressional authorization.
This is potentially a huge blow to the President’s agenda. I say “potentially” here for two reasons.
First, this will absolutely be appealed to the Supreme Court. Whether they choose to hear the case or not remains to be seen, but I cannot imagine them turning this case down and refusing to hear it. Thanks to a subsequent court order, however, the mandate that the tariffs be stricken does not take effect until October 14, giving Trump time to appeal the case to the Supreme Court. Because of this, the tariffs that have been imposed through International Emergency Economic Powers Act (IEEPA) for trafficking and reciprocal purposes will remain in effect for roughly six more weeks.
Second, back in May when the Court of International Trade made their ruling, the Trump administration began floating alternative strategies for accomplishing their tariff goals. Director of the Office of Trade and Manufacturing Policy Peter Navarro himself said that the Court of International Trade’s ruling “did not catch us by surprise,” indicating that the Administration has contingency plans in place beyond simply appealing the decision. We may end up with tariff rates mirroring what we have now, but with a different legal backing.
Importantly, this ruling does not affect tariffs such as the 50 percent steel and aluminum tariffs. Those were enacted using the Trade Expansion Act of 1962 and the Trade Act of 1974, not IEEPA, and are thus beyond the scope of this ruling.
In what can only be described as an anticipated reaction, President Trump turned to Truth Social and posted the following:
Looking at his claims that the US Court of Appeals is “partisan,” he might have a point. Of the eleven judges who participated in this case, eight were appointed by a Democratic president and three were appointed by Republicans.
Dissent
Appointed By
Majority
Appointed By
Judge Taranto
Obama
Judge Lourie
George H. W. Bush
Judge Chen
Obama
Judge Dyk
Clinton
Judge Moore
George W. Bush
Judge Reyna
Obama
Judge Prost
George W. Bush
Judge Hughes
Obama
Judge Stoll
Obama
Judge Cunningham
Biden
Judge Stark
Biden
This stands in stark contrast with the composition of the Supreme Court, which has three of its nine members appointed by Trump himself during his first term (Gorsuch, Kavanaugh, and Barrett), three more appointed by the Bush presidents (Roberts, Thomas, and Alito), two Obama appointees (Sotomayor and Kagan), and one Biden appointee (Brown Jackson). One might be tempted to think that, with six Republican appointees on the bench, the likelihood of the Supreme Court overturning the Court of Appeals decision is higher. But several of the Republican Justices have had no problem telling Trump “no” in the past. Chief Justice Roberts, for example, rejected Trump’s call to impeach judges who ruled against his deportation plans earlier this year. Justices Roberts and Barrett “joined the court’s three liberal justices” and “rejected Trump’s plea to halt the sentencing proceeding in his New York hush money case.” That being said, Trump does have a strong record in the Supreme Court this term.
In the end, while this ruling should be celebrated by those of us who believe that tariffs have wrought harm upon our nation, it is not the be-all-end-all ruling that will vanquish the word “tariff” from the lips of the President or the tip of his pen. At this point, the ball is in the Supreme Court’s court, which is where it was almost certainly always going to end up.
