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Talk of new tariffs opens up an old constitutional issue

December 23, 2016 by NCC Staff


The news out of Washington this week of potential tariff actions by the Trump administration in January harks back to one of the big political and constitutional issues of a long-ago age.

Credit: Cornell University Library

On Thursday, CNN reported there has been debate among Trump advisers of a 5 percent import tariff coming in the new year.  Trump spokespeople didn’t comment on the report to CNN, but the media outlet said any tariff proposals would run into opposition from pro-trade wings of the Republican Party.

There were few details on the alleged tariffs, such as their role as a replacement for current tariffs, or their implementation as a new tax on imports. The report was also unclear on if the tariffs would be done through Congress as part of a House bill, or under the President’s limited authority to make tariff decisions.

The latter is a key question, since under the Constitution’s original terms and subsequent precedents, Congress has the ultimate power in tariff questions. One of the critical early parts of the Constitution was Article I, Section 8, which stated the enumerated powers of Congress.

The section lists powers directly controlled by Congress, and the first thing on that list is tariffs: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”

While the Constitution’s Article II gave the President the power to negotiate treaties, the chief executive didn’t have the direct power to set or impose tariffs on nations that traded with the United States. The President could only take such action if a law passed by Congress allowed it.

The first major law passed by the First Congress in 1789 dealt with tariffs and it stated that “it is necessary for the support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares and merchandise imported.” (Disagreements over the law also led to an ideological split between James Madison and Alexander Hamilton.)

Despite these precedents, the constitutionality of tariffs was debated for well over a century. The Supreme Court issued a unanimous ruling in J. W. Hampton & Co. v. United States (1928), confirming their legitimacy and the ability of Congress to delegate tariff powers to the Executive Branch. Chief Justice William Howard Taft rejected claims by the J.W. Hampton company that a high tariff levied on it by the Coolidge administration violated the intent of a congressional statute, the Tariff Act of 1922. The statute provided that a President could make adjustments to tariff rates after proper investigation and in response to changing production costs.

“The enactment and enforcement of a number of customs revenue laws drawn with a motive of maintaining a system of protection, since the revenue law of 1789, are matters of history,” Taft wrote. “So long as the motive of Congress and the effect of its legislative action are to secure revenue for the benefit of the general government, the existence of other motives in the selection of the subjects of taxes cannot invalidate congressional action.”

Taft had experience with the volatile issue of tariffs. President Taft’s stance on tariffs helped his election bid in 1908 and hurt his re-election chances in 1912, after he changed positions on the tariff question.

But by 1928, tariffs had started to fade away as a major political question in the country, as the national income tax replaced tariffs as a source of federal revenue. In 1934, Congress gave the President limited authority to reduce tariffs. In later years, Congress also established a procedure called Trade Promotion Authority to expedite the consideration of trade issues.

Earlier this month, the Congressional Research Service updated its guidance on presidential authority and tariffs. It reviewed the past century of major trade deals involving shared tasks between Congress and the President. “What can be culled from these examples is that most of the provisions require the President to make some threshold finding or determination before he may take some circumscribed trade-related action to counteract his finding.”

If a presidential tariff action is challenged in court, once it is determined that the court had jurisdiction over the case, it will look to see if Congress delegated a related tariff power to the President. If so, the CRS says, “a court will probably not review the reasoning behind a President’s determination that executive action is warranted, it will likely examine closely whether the selected means of executing the delegated powers bear a reasonable relationship to that determination.”

Scott Bomboy is the editor in chief of the National Constitution Center.

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