Trump retains targeted tariff authority despite Supreme Court setback

President Donald Trump lost his tariff case at the Supreme Court. However, by using its customs duties carefully and prudently, it can turn this into a gain for its own policies and for America.

The Supreme Court ruled in Learning Services v. Trump that the International Emergency Economic Powers Act (IEEPA) does not give the president the authority to impose tariffs. While the law unquestionably gave him the power to regulate imports in unusual and extraordinary emergencies, the dispute was whether tariffs, a form of tax, were legally and constitutionally “regulation.”

While there were reasonable arguments on both sides, six of the nine justices ruled that this was not the case and that the IEEPA does not give the president the authority to impose tariffs. What are the possible economic consequences of this decision and what should it mean for Trump’s future trade policy?

First, remember that tariffs are a bad idea as economic policy. International trade increases income and supports economic growth in every trading country. Trade is mutually beneficial and win-win for all trading parties. It is a popular myth that trade destroyed American manufacturing. American made, St. It has more than doubled steadily since 1970, data collected by the Federal Reserve Bank of St. Louis show.

On the other hand, roughly 90% of the cost of “redemption day” tariffs is borne by American businesses and consumers, as analyzed by economists at the New York Federal Reserve. The American economy has experienced solid growth and low unemployment under the Trump administration; but this was thanks to his excellent energy and deregulation policies that reduced regulatory burdens. Tariff costs are another burden on the economy. Removing this obstacle should further stimulate economic growth and employment.

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It is also a popular myth that a trade deficit is a loss for a country. The trade deficit, or current account, is the balancing of capital and financial accounts, that is, foreign investment in America. There are two reasons for the flow of foreign investment to America. First, America’s security and dynamism make it an attractive place to invest, which is a good thing. The other is the federal government’s increasing appetite for borrowing to cover its growing deficits, which is a bad thing. Tariffs and trade restrictions make America’s economy less dynamic and do nothing to rein in government fiscal irresponsibility. There is no good economic argument for tariffs.

But for foreign policy and national security purposes, tariffs can have an important role. Numerous other laws give the president the authority to impose such tariffs. For example, Section 122 of the Trade Act of 1974 (on which Trump currently imposes a 10% tariff) allows tariffs in the event of severe balance of payments deficits. Section 232 of the Trade Expansion Act of 1962 authorizes tariffs on goods for national security purposes.

Numerous other laws give the president the authority to impose tariffs. However, all of these include various reasonable conditions and limits. For example, if the president imposes a national security tariff, Article 232 gives the administration 270 days to develop a study to justify the tariff. Trump still has broad authority to impose tariffs, but it is now more limited, and any exercise of that authority requires transparent reasons.

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Although this situation limits Trump a little, it can turn it into a gain for his presidency. Tariff power can be useful as a foreign policy tool and can provide many benefits for the American economy by using a more nuanced and targeted approach to tariff policy.

For example, the European Union is trying to impose its own ESG (Environmental, Social and Governance) standards on American companies doing business in Europe through the EU’s Corporate Due Diligence and Sustainability Guidelines. EU guidelines will apply to all a firm’s activities everywhere, not just those in Europe.

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Similarly, the EU tried to impose the Digital Services Act on American media platforms such as X (formerly Twitter) and Meta. This would require companies to monitor and censor free speech, despite America’s First Amendment protections. Targeted tariffs could be a very useful tool to counter this, preserve free trade, and defend American firms against such attacks. This will have the effect of strengthening America’s economy and position in the world.

President Trump lost a round at the Supreme Court and his ability to impose tariffs was curtailed. But by using his powers wisely, he can turn this into an opportunity to make America stronger and make his presidency a greater success.

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