The following is a lightly edited transcript of the May 14 episode of the Daily Blast podcast. Listen to it here.
Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR network. I’m your host, Greg Sargent.
President Donald Trump’s trade war with China is coming under increasing media scrutiny, and the results are brutal. A new editorial from The Wall Street Journal savagely notes that Trump’s recent climb down with China was a surrender that has only produced more economic uncertainty. A long New York Times piece details that Trump’s aggression has not produced any major concessions from China. We think this is going to get worse, and here’s why: In addition to being terrible policy, the tariffs are a massive abuse of power. And once the lawsuits against them get going, this too will be fully aired out for the public. Ilya Somin, a law professor at George Mason University, is helping to spearhead one of the most important lawsuits against these tariffs—a suit brought by five businesses. So we invited Ilya on the show to talk about where this is all going. Ilya, thanks for coming on.
Ilya Somin: Thank you very much for having me.
Sargent: So this new Wall Street Journal editorial is very harsh. It notes that Trump just reduced his tariffs on China to 30 percent as part of this pause. Critically, though, the journal describes this as a major retreat and a surrender and a repudiation of Trump’s underlying policy ideas here. I take it you agree with all that, Ilya?
Somin: To a large extent, though, I would note it’s not a complete repudiation of his underlying policy ideas given there’s still a 30-percent tariff on China, which is still much higher than before he started this trade war. So it’s in accordance with his philosophy that tariffs are somehow good for us—but in reality they cause enormous harm. So it would be better if he really did just repudiate that philosophy because it’s a bad one.
Sargent: Indeed it is, but this is a retreat and a surrender, isn’t it? Can you talk about that? Because I think it’s built into what’s wrong with the policy in a larger sense that it’s come to this.
Somin: Sure. So I’m not familiar with all the details and negotiations with China, but as far as I understand it, essentially, he lowered the tariffs that he initially imposed against the Chinese—he had raised them to 145 percent, and now it’s back to 30 percent. But in exchange, all the Chinese did is gave up some of the retaliatory measures that they had against U.S. products in response to his measures. So he hasn’t actually gained anything that the United States didn’t already have before this trade war started.
Indeed, we are in a worse situation now than we were before because both Chinese and American tariffs are higher than they used to be even under this deal. And of course, this deal, as I understand it, is only supposed to last for 90 days. So after that, it might go back up to 145 again.
Sargent: Which is why people are saying that there’s all this new uncertainty, which I think is a critical thing that’s missing from the discussion. All that’s happened here is that businesses don’t know how to plan.
Somin: Yeah. It’s not just the China tariffs; it’s the tariffs that is imposed on almost every other nation in the world. China is just one part of this. And businesses—like our clients in the case and others across the U.S.—in order to function effectively, need to be able to have long-term relationships with suppliers, with customers. They need to make investments in factories and other kinds of facilities. And all of that is difficult, or impossible, to do if you don’t know what the tariff rate is going to be tomorrow—especially if those tariffs can be of whatever amount the president wants them to be, can target any country he wants them to target, and can last for however long he wants, which is the massive power that the president is claiming here.
Sargent: It seems to me that the massive abuse of power that you just mentioned that these tariffs represent gets far less attention than their impacts. To remind listeners, Trump has invoked an emergency authority to impose these tariffs and the emergency he has cited is our trade deficits, which are not an emergency in any sense. Ilya, can you tell us about the lawsuit?
Somin: He’s trying to use a law called the International Emergency Economic Powers Act of 1977. And he claims that law gives him the power to impose pretty much any tariffs he wants on any country at any time for any amount, when in reality it does nothing of the kind. Start with the fact that the word “tariff” is not even mentioned in this law at all, nor is there a synonym like “duty” or “imposed” or something like that. He’s trying to use vague language which says that there’s a power here to regulate international trade but regulate and tax are distinct powers. Then in addition, even if you assume the tariffs can sometimes be authorized under this law, it can only be used when there is a national emergency, and that emergency has to involve an extraordinary and unusual threat to American security.
An emergency is something like a sudden unexpected crisis. There’s nothing sudden unexpected or a crisis about trade deficits, which have existed for decades. They’re certainly not extraordinary or unusual, and, for that matter, they’re not a threat. Most economists will tell you the trade deficits are not actually harmful, particularly bilateral trade deficits with individual countries. I have a big trade deficit with my local supermarket. I buy a lot of stuff there and they virtually never buy anything from me, but nobody can reasonably say that’s an emergency or an extraordinary threat or anything like that.
Similarly, the fact that we may buy more from Canada or from Europe or some other country than they sell to us—that’s not extraordinary, unusual, or a threat. It just means that they have goods that we value and we value them more than the money that we pay for them, just as I value what I get from the supermarket more than I value the money there. And it’s more efficient for me to get food from the supermarket than to try to grow it myself. There are many products—like some of those imported by our clients in this case—which are more efficiently [produced] or produced at lower cost in other countries. Therefore, it makes sense to import them and for us to devote our own labor power and resources to doing other things that we’re better at.
Sargent: Ilya, I have a big trade deficit with my dentist. My dentist has been ripping me off really badly because I’ve been paying him to fill my cavities and do away with my horrific toothaches.
Somin: And he doesn’t pay you to do extra podcasts in exchange for that. It’s terrible. Sounds like a crisis to me. Emergency maybe even.
Sargent: It’s an emergency, yeah. So on Tuesday, your lawsuit was in court, and a panel of judges grilled the administration’s lawyer. I want to read a line from one of them to the lawyer, “We have a national shortage of peanut butter. Can the president declare an extraordinary emergency? What you’re saying is there’s no limit.” Ilya, that seems to me to be the essence of it. If Trump can define trade deficits as an emergency, what can he not define as an emergency?
Somin: Well, Judge Restani, whom you just quoted, put it very well. Under the administration’s interpretation of this law, they can declare an emergency over anything they want—including a peanut butter shortage if they so choose—and they can impose any tariffs they want against any country in the world as a result of that so-called emergency. Even in the hypothetical, it could be even against countries that have nothing to do with the peanut trade here, even though the supposed emergency is trade deficits. He’s even imposed tariffs on numerous countries which we don’t have deficits with, even some we have surpluses with, and also on countries like Switzerland and Israel that have no tariffs whatsoever imposed on American goods. And yet he still started a trade war with them.
Sargent: So, Ilya, where is this all going? Can you roadmap for us what it looks like if these tariffs are stopped in the courts? How does it unfold? What are we looking at going forward?
Somin: Within the next few weeks or possibly sooner, we expect a decision from the trial court, the Court of International Trade, where the hearing was held today. At that point, it is very likely that whoever loses will appeal the case to the Federal Circuit, which is the specialized appellate court that, among other things, hears cases involving trade. They will make a decision probably within the next few weeks or months. And at that point, whoever loses there might try to appeal to the Supreme Court. The Supreme Court certainly is not required to hear the case. As a general rule, they only hear cases they want to take. It is possible that they would want to take this case—or one of several other cases which is challenging the Trump’s tariffs—because of the enormous significance of the issue. But it’s always difficult to make predictions about what cases the Supreme Court will take or won’t.
Sargent: So what are the prospects for success here? And let’s say it does go to the Supreme Court. What might they end up ruling? Are you confident, or is it touch and go?
Somin: Obviously, they would have a lot of options before them, and it’s hard to predict exactly what they would do. But I think we have a strong case, including in terms of the jurisprudence that this court and particularly the conservative 6–3 majority on the court has laid out over the last few years. I already mentioned that the text of the statute does not give Trump the kind of authority that he claims. Many of the judges are textualists and say you should carefully consider the text of the statute.
Second, there is this doctrine, which has been developed more fully in recent years, called the major questions doctrine. [It] essentially says that if the executive claims that Congress has delegated to it some power of vast economic or political significance, then at the very least, the executive has to show that there is a clear delegation here. And here it’s anything but clear. It’s not at all clear that there is tariff authority in the statute at all. Even if there is tariff authority, it is, to put it mildly, not clear that this is the kind of emergency—an extraordinary, unusual threat—which is necessary to trigger the use of this statute. We actually think it’s clear that it’s not that kind of emergency, and the tariffs are not authorized, but at the very least these issues are unclear. And if something is unclear under the major questions doctrine, the Supreme Court says courts have to rule against the executive when they claim the power has been delegated to them.
You can ask, Is this a major question? All I can say is if this is not a major question, I do not know what is. He’s starting the biggest trade war since the Great Depression. He is imposing what is essentially a tax increase of close to $2 trillion on Americans over the next decade. Before this, I had thought that the biggest major question the Supreme Court had considered and said was a major question was President Biden’s massive student loan forgiveness program, which the Supreme Court rightly struck down. And that had about $400 billion, which to me at least seemed like a lot of money. But this trade power grab makes even what Biden did in that case seem like small potatoes by comparison.
Sargent: So, Ilya, what’s a plausible ruling from the Supreme Court that you can envision? What do they say?
Somin: Sure. A plausible ruling for the Supreme Court, or even from the lower courts as well as—they have any of six different options by which they can rule for us. I already mentioned some of them. A very simple ruling would be IEEPA doesn’t authorize tariffs. Secondly, even if it does, there is no national emergency here. Then third, even if there is a national emergency, there is no extraordinary or unusual threat. And then fourth, assuming they rule against us on each of those three issues or they find that those issues are ambiguous, they can rule in favor of us on the major questions doctrine, which I mentioned earlier.
But let’s say that the court concludes that the statute does clearly give the president this unreviewable power to impose whatever tariffs he wants, then that would be a violation of the Constitution under a principle known as the nondelegation doctrine, which says there must be at least some limits to Congress’s ability to give away its power to the executive branch. And if there’s ever any nondelegation limits on what Congress can do, they have to apply here because this is the most sweeping delegation of power claimed by the executive since at least the 1930s in the famous Schechter Poultry case, where the National Recovery Act gave FDR the power to set prices and regulations for every sector of the nonagricultural economy. The Supreme Court said that’s an excessive delegation, struck that down. That precedent is still on the books.
This is the first case that I’ve seen since then where the president has claimed a comparably large delegation, as big as the one that was struck down in Schechter Poultry. So if there’s any limits to congressional delegation at all—and it seems like both liberal and conservative justices do agree there must be some limits, though they may differ on exactly what kinds—then that limitation applies here. There are some of my fellow law professors, I have to admit, who do believe there should be no limits to congressional delegation whatsoever. You and I can talk about that if you’re interested, but I am hopeful that the Supreme Court would not get to that point.
Lastly, there’s a technical legal doctrine called the constitutional avoidance doctrine, which says that if there is an interpretation of federal law that raises constitutional problems, then courts should do whatever they can to avoid adopting that interpretation. As long as there’s a reasonably possible alternative interpretation, they should pick that one. Here, if you want to avoid this enormous nondelegation issue that would be raised, all the courts have to do is agree with our interpretation on one of those previous four points and then they wouldn’t need to get to nondelegation. And the Supreme Court, including Chief Justice Roberts, has been pretty forceful in asserting this constitutional avoidance doctrine. You may remember that the Obamacare case in 2012 turned on that to a large extent.
Sargent: And any one of these cases, any one of these avenues leads to something like the Supreme Court essentially striking down the tariffs and halting them, right?
Somin: Yes. Yes. Obviously, there then might be a separate set of issues of whether the remedy is a nationwide injunction or some more limited injunction. But it would be a ruling that says these tariffs are illegal and, as a practical matter, they would have to end either immediately, or there would have to be follow-up cases where people can get injunctions blocking the tariffs against their particular clients and the like.
Sargent: The New York Times had a detailed report on Trump’s trade war with China that was very harsh as well. Its key point was that we’ve had enormous disruptions to global trade due to the trade war, but China hasn’t made any serious concessions. Jonathan Chait of The Atlantic pointed out that at the start of all these trade wars, Trump issued a warning, “Do not retaliate and you will be rewarded.” Well, China did retaliate, violating Trump’s warning, and it got rewarded for it. What does that tell us about the folly of the whole enterprise?
Somin: I think the enterprise is a folly even aside from this, but as I said before, Trump has so far gotten nothing from the tariffs against China that he didn’t already have before. Moreover, there’s contradictory rationales here. On the one hand, they’re saying, Well, the point of these tariffs are to get these other countries to make concessions. On the other hand, they’re saying, These tariffs should be a permanent policy so as to protect American manufacturing from competition. And obviously, it has to be one or the other; it can’t be both. If the plan is to give up these tariffs as a bargaining chip, then they can’t be maintained as a way of protecting American domestic industry. If, on the other hand, the goal is to maintain them, then you can’t really successfully use them to gain concessions from these other countries. And I think the Chinese, and perhaps others as well, have seen the incoherence of this policy and therefore they hope to exploit that.
Sargent: Well, it seems like the fact that these policies are a disaster is closely related to them being such a massive abuse of power. We don’t want the president to have the unilateral power to impose such a broad and sweeping tax on imports that will be paid for by working- and middle-class American consumers. And the massive fiasco this represents actually confirms why we don’t want that. Just to wrap this up, can you talk about that?
Somin: Sure. So you don’t want a situation where one man has completely unreviewable authority to start trade wars and impose tariffs whenever he wants. That’s a blatant violation of the separation of powers. It’s actually one of the things that the English Civil War was fought over. King Charles I tried to do things like this and impose taxes without the consent of parliament. That’s one of the things that led to that civil war. And one of the lessons that the founding fathers learned from that English experience is that the power to tax, including the power to impose taxes on imports, is something that should be with the legislature, not given to one man.
I already mentioned how it’s important that for the economy to have stable expectations about what the legal rules are going to be, what the tariff rates are going to be, and so on—and that’s just not possible if one man can impose tariffs anytime he wants. On top of that, you have the risk that has been born out now that you get an economic illiterate in the White House who does not seem to understand Basic Econ 101 and therefore thinks trade deficits are some horrible problem, even though basic mainstream economics suggest that they’re not.
Sargent: Very nicely said. Ilya Somin, thanks so much for coming on with us. Great to talk to you.
Somin: Thank you for having me.
Sargent: You’ve been listening to The Daily Blast with me, your host, Greg Sargent. The Daily Blast is a New Republic podcast and is produced by Riley Fessler and the DSR Network.
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