Another Trump presidency may be right around the corner. Perhaps his primary economic policy point this campaign has been his favorite word: “tariffs.” According to Alan Rappeport, an economic policy reporter for The New York Times, Trump has considered instituting between 10 and 50 percent tariffs on all imported products, a 60 percent tariff on goods from China, and higher targeted tariffs for particular products and industries. Trump and his allies argue these new import duties will build GDP, help lower the trade deficit, create jobs, and avoid supporting child labor in other countries. On the other hand, Janet Yellen, the current U.S. Secretary of the Treasury, criticizes this as bad policy, arguing that it results in reciprocal tariffs, hurts businesses, and creates high prices for consumers. Notably, in May, Biden increased tariffs on numerous Chinese products and maintained many of Trump’s tariffs on Chinese products, but he has not taken the extreme measures Trump is considering in his potential second term. Biden and Harris justify the tariffs as retaliation against unfair trade practices, while Trump has reinforced that taxing imports to protect American workers would broadly benefit the nation’s general economic policy.
This essay does not resolve the never-ending debates about the economic effects of tariffs, what constitutes a proper political justification of a tariff, or whether Biden or Trump’s approach is preferable. Instead, it tackles another question: what statutory and constitutional authority would Trump have to increase tariff rates in a second term?
The Historical Background of U.S. Tariffs.
The tariff debate has been a central pillar to U.S. economic policy discussions since the birth of the country, especially between the Founding Era and the Civil War, according to Phillip Magness, an economic historian writing for the Cato Institute. Magness records that Madison, in the first proposed tariff bill in the U.S., introduced a tariff with specific duties on alcohol and one general rate on all other imported items. William Bolt, a Ph.D. scholar on American tariffs, found that Jefferson’s Republicans mostly disfavored the tariff, which was about 5% for most imported items. Showing how tariffs relate to constitutional structure, Douglas Irwin, a professor of economics at Dartmouth University, observed that Jefferson feared that tariffs would channel wealth to the industrial North and threaten a diversified, anti-federalist system. After negotiations in Congress, George Washington signed the tariff bill into law. Thus began a history of tariffs in the U.S. that is both heated and central to our constitutional structure.
The tariff debate served as yet another manifestation of the Hamilton-Jefferson feud. Iain Murray, a Senior Fellow at the Competitive Enterprise Institute, observed that Hamilton, a lover of free trade, initially disfavored tariffs although he eventually changed sides. As his views morphed, Hamilton became a major proponent of the US’s first tariffs. Disfavoring tariffs, Jefferson even felt passionately that tariffs should not penalize his beloved imported light wines, as that would encourage public drunkenness by incentivizing heavy wines. Both Founders thought tariff policy was extremely important in shaping human behavior.
Moreover, tariff policy gave rise to deep constitutional issues. Differing tariff policies of the parties transformed into a heated area of debate (second only to slavery) in the 1800s, which Congress fought over for decades, with various states and interests fighting for specialized rates for a variety of items. According to Madison Pirie, President of the Adam Smith Institute, tariffs even caused a “constitutional crisis” because the South, with less manufacturing power, bore much of the burden of the tariffs of 1828, leading the South to nullify the tariff.
Additionally, from the Founding Era to the Civil War, tariffs were the U.S.’s primary revenue generator, providing, according to the Tax Notes Staff, approximately 90% of federal revenue during this period. It makes sense then why tariffs, implemented by Congressional vote, would create such a divisive constitutional battle and form famous feuds that have endured surrounding the policy.
Conversely, it makes sense why tariffs often fell out of the public conversation in the 1900s. In contrast to the 1700-1800s, tariffs have produced about 2% of federal revenue in 2023 and between 1-2% since the 1940s. The passage of the Sixteenth Amendment and the Revenue Act of 1913 changed this balance, as did the two World Wars. Additionally, U.S. industry boomed in the early 1900s, which lowered the general feeling that tariffs were needed to protect U.S. industry, notes Tyler Halloran in the Fordham Journal of Corporate and Financial Law. Peri E. Arnold, a Political Science professor at Notre Dame, points out that President William Howard Taft fell out of favor with Progressives by weakening his resolve to lower tariffs which opened the door for him to lose the election of 1912. In fact, his switch on tariff policy probably was the dispositive issue in the 1912 election.
In the wake of the Great Depression, the U.S. brought back severe tariffs in the Smoot-Hawley Act of 1929, imposing average import duties of 20% (see the Congressional Research Service (CRS)’s Overview of U.S. Tariff Policy). This devastated U.S.-European trade, wiping it out by two-thirds. Thus, what could have turned into a revival of tariffs just worsened the Depression, souring voters. Tariffs have thus fallen out of the public eye in the last century, and, when remaining in the public eye, they have not fared well.
To summarize, tariffs started off as the top revenue generator and as hotly debated matters of public importance in America’s history. They all but disappeared as the income tax replaced tariffs as the primary U.S. revenue generator and free trade policy began to dominate American politics. Importantly, presidents have not unilaterally hiked tariff rates historically, except as reciprocation to other countries. Rather, the battles over tariff policy occurred in Congress until the 1930s, when presidents began receiving the authority to impose reciprocal tariffs in trade agreements and to cut tariffs by certain percentages.
How Much Authority Can Be Delegated to the President?
Talk of new tariffs by a president opens up an old constitutional issue: Congress’s authority to delegate authority to the executive branch, an evolving and unpredictable area of constitutional law. Article I, Section 8, Clause 1 of the U.S. Constitution unambiguously gives Congress the authority to “lay and collect Taxes, Duties, Imposts and Excises . . .”, so how could the President have the authority to determine tariff rates? Caitlain Devereaux Lewis, a researcher with the Library of Congress, notes that, before the 1930s, Congress usually set tariff rates, but Congress decided to increasingly delegate adjustment authority to the President, with certain time, review, and renewal provisions.
Delegation of authority to impose tariffs and adjust tariff rates traditionally have been limited in scope. In Field v. Clark (1892), the Court held that Congress could require the President to impose reciprocal tariffs in certain circumstances because the action did not involve the President legislating a new tariff into existence or determining tariff policy. In J. W. Hampton & Co. v. United States (1928), the Supreme Court, applying the “intelligible principle” test, unanimously held that Congress could delegate tariff authority to the executive branch, so long as Congress provided an intelligible standard by which the President could determine whether to adjust tariff rates. William Howard Taft, who had angered so many by refusing to aggressively lower tariffs as President, upheld the Coolidge administration’s raising of tariffs under the Tariff Act of 1922 during his time as Chief Justice of the Supreme Court, allowing the President to adjust tariff rates, including imposing reciprocal tariffs and tariffs adjusted for differing costs of production between countries after sufficient research and after being advised by a Tariff Commission appointed by the President with the advice and consent of the Senate. Using the reciprocal tariff feature, Coolidge changed the duty-free status of some items, prompting challengers to argue that Congress unconstitutionally delegated legislative and treaty-making authorities, violating the separation of powers. FEA v. Algonquin SNG, Inc. (1976) confirms that the “intelligible principle” test still applies, requiring “clear preconditions to Presidential action.” However, law surrounding nondelegation is uncertain as the intelligible principle test is problematic and unpopular.
The problem with the notorious “intelligible principle” test is clear: it is vague. The bigger problem has been what standard to replace it with—given that the replacement must protect separation of powers while enabling an energetic executive that can, in the tariff policy context, keep American industry at the international forefront. In 2020, Johnathan Hal observed that five Justices on the Supreme appeared ready to overturn the test. In his dissent in Gundy v. US (2019), Justice Gorsuch cited James Madison and John Marshall on the difficulty of balancing the branches of government. He then proposed a new test, allowing delegation in three circumstances. “[W]hen regulating private conduct,” Congress can have the executive “fill up the details.” Congress can also pass rules governing private conduct and condition application of such rules on “executive fact-finding.” “Third, Congress may assign the executive and judicial branches certain non-legislative responsibilities.” Importantly, Molly Nixon, an attorney with the Pacific Legal Foundation, records the famous news that the Supreme Court this year declined to revive the nondelegation doctrine or otherwise implement a stricter standard barring excessive delegation of congressional power. Still, the door is open to a new test or to a tightening of the existing test by justices seeking to curtail executive power.
Gorsuch’s proposed test essentially aims to confine the executive branch to executive actions like fact-finding and tweaking policy. These are essentially powers already within the nature of the executive branch. In fact, Justice Gorsuch’s prime example of “non-legislative responsibilities” is foreign affairs matters, where the executive has special constitutional powers for national security reasons and economic agility reasons.
In summary, Congress may delegate to the President tariff rate adjustment authority in the context of reciprocal trade agreements, national security and economic crises, and certain limited reductions, but unilateral and broad tariff-hiking authority exceeds executive authority and violates the separation of powers.
So What Exactly Can the President Do with Tariffs?
The President can reduce tariff rates, increase them as reciprocal retaliation measures against other countries or where national security is at risk, and temporarily increase them in the case of sudden import surges that threaten the U.S. economy. There is significant authority and leeway in presidential authority over tariffs, but not such as to allow huge unilateral rate increases across the board without some imminent crisis to justify such action.
Many are under the impression that the President already has been delegated the authority to set tariff rates with few restrictions. Tobias Burns, writing for the Hill, recently wrote that the President, according a recent Congressional Research Service report, has authority under Section 103(a) of the TPA-2015 “ ‘to proclaim limited changes to U.S. tariff rates without further congressional action.’ ” But the CRS’s October 15, 2024, report notes that that authority came from TPA-2015, which expired on July 1, 2021. Further, the Trade Act of 1974 gave the President authority to raise existing tariff rates by up to 20%, but that expired in 1979. The President generally has significant statutory authority to implement reciprocal tariffs and otherwise to reduce tariff rates, not to raise or create them.
Other statutory provisions give the executive branch significant authority over tariff policy. In an overview of U.S. tariff policy (dated October 3, 2024), the CRS identified how a president can set tariff rates under current law.
In dozens of statutes, Congress has empowered the President to adjust tariff rates in response to specific trade-related concerns that touch on issues of executive interest, such as foreign policy and national security, or require an administrative finding by a U.S. agency. For example, Section 232 of the Trade Expansion Act of 1962 empowers the President to adjust tariffs on imports that threaten to impair U.S. national security. Section 5(b) of the Trading with the Enemy Act and Section 203 of the International Emergency Economic Powers Act empower the President in a time of war or emergency to impose tariffs on all imports. Section 201 of the Trade Act of 1974 empowers the President to raise tariff rates temporarily when the U.S. International Trade Commission (ITC) determines that a sudden import surge has caused or threatened serious injury to a U.S. industry. Congress has also empowered U.S. agencies to impose duties to offset injurious unfair trade practices, based on industry petitions or through initiation by the Commerce Department.
These provisions reflect one thing in common: in situations invoking national security concerns or extraordinary threats to U.S. industry, the President has broad authority. Otherwise, authority to increase tariffs is generally not delegated to the President.
The Constitutionality of Trump’s Proposals Is Questionable.
Congress has the authority to hike tariffs as Trump proposes, but is that what he is really proposing? Given U.S. congressional gridlock, that is unlikely unless there is a MAGA sweep in the election. He may be planning to hike tariff rates himself if Congress will not. While rate hikes against China probably would pass constitutional muster, across the board unilateral tariff hikes by Trump would violate the Constitution.
The above history and legal developments have yielded the following principles: (i) the “intelligible principle” test is vague and at risk of being overturned; (ii) such test has justified executive authority to decrease tariff rates and impose reciprocal tariffs; (iii) TPA-2015, which gave broader rate-setting authority to the President, expired in 2021 and was never held valid by the Supreme Court; and (iv) national security and economic crises may justify radical hikes in tariff rates by the President. In today’s political climate, rate hikes against China would probably fit within the national security exception, but across-the-board hikes do not fit within any context allowed by law.
In 2024, tariffs may have many economic and political justifications, including, according to Tyler Halloran: “(1) to bring back jobs lost to foreign countries, (2) to place tariffs on nations that themselves have tariffs on imports from the U.S., (3) to curb intellectual property . . . theft by China, and (4) to balance the trade deficit.” Conversely, tariffs hurt consumers, invoke retaliation, and are poor revenue generators in proportion to the U.S.’s total revenue.
The legality of Trump’s ideas will probably vary. Courts could allow high tariff rates as reciprocation against China and in response to national security concerns related to IP theft and U.S. independence from Chinese products. Alternatively, it is hard to argue that an across-the-board tariff on imported products imposed by Trump could be constitutionally authorized. Even if there were some broad authority given to Trump by statute, such statute would extend beyond any intelligible principle of limitation or such other stricter test as the Court might apply. An originalist Court will note that tariff rates historically have been determined by Congress, and, on a generous day, will acknowledge that certain limited rate-setting by the President is acceptable, if involving reductions in tariff rates, reciprocating against other countries, protecting national security, and reacting to imminent and urgent economic crises.
Dan Keller received his MA in Political Science from Baylor University and his JD from The Ohio State University Moritz College of Law. Dan is an attorney at Critchfield, Critchfield & Johnston, Ltd., in Ashland, Ohio.
