Legal Docket: Weight of two words

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JENNY ROUGH, HOST: It’s the 23rd of February. Glad to have you along for today’s edition of The World and Everything in It. 

Good morning, I’m Jenny Rough.

NICK EICHER, HOST: And I’m Nick Eicher.

Time now for Legal Docket.

Last Friday at 10 a.m., the nine Supreme Court justices took to the bench. Chief Justice John Roberts announcing the judgment of the court in a set of highly anticipated cases.

And within moments, news alerts lit up screens across the country.

MONTAGE: One of the most significant cases that the justices have decided in recent years / Significant decisions on presidential power in decades. / Breaking news alert for you, it’s finally here: the Supreme Court has made a decision on President Trump’s tariffs. / It appears to me to be a 6 to 3 decision. / Bottom line, it is a 6-3 to invalidate the use of these sweeping tariffs. / The Constitution gives Congress the power to impose taxes / Based on two words—“regulate” and “importation”—those words, the Supreme Court says, “cannot bear such weight.”

Those are the words of the Supreme Court ruling that the president’s position on the tariff authority he’s been using “cannot bear such weight.”

ROUGH: Well let’s back up and see how we got here.

It’s not often that tariff-related cases come before the Supreme Court. But this past November, the Court heard oral arguments in Learning Resources vs Trump, which was actually dismissed for lack of jurisdiction, and its companion Trump vs V.O.S Selections, which got right to the heart of the matter.

GIL ROTHENBERG: Well, tariffs are the imposition of a tax on imported goods.

Gil Rothenberg is the former chief of the tax division’s appellate section of the U.S. Department of Justice.

ROTHENBERG: So … they are simply a tax on imports.

That matters. Because if tariffs are taxes, Congress has the power to levy them. So this wasn’t just a fight over trade; it was a fight over who sets the nation’s economic course.

The Constitution separates powers among three branches of government. And Article 1, Section 8 gives Congress the power alone to impose taxes.

ROTHENBERG: Therefore, the president cannot impose a tax on his own.

EICHER: Here, the president concedes he has no authority in the Constitution to impose tariffs, but this case centers on a federal statute targeted to emergencies. Trump argued that Congress delegated that power in a law from 1977, it's known as the International Emergency Economic Powers Act, IEEPA, as it’s known by the acronym.

ROUGH: Shortly after President Trump took office for the second time, he pointed to two emergencies he deemed foreign threats: the flood of illegal drugs from Canada, Mexico, and China; and the United States’ large trade deficit. So he imposed tariffs on most Canadian, Mexican, and Chinese imported goods, and most imported goods from all trading partners.

EICHER: The tariffs are imposed on the importer.

ROTHENBERG: Frequently, the importer passes on the tariffs in the form of higher prices to the consumer. But some of these tariffs were so large that the importer was reluctant to, say, double the price of a product, because the sales would disappear.

Several small family businesses as well as 12 states filed a lawsuit against the president, arguing IEEPA doesn’t authorize the president’s tariffs.

It does authorize the president to do a long list of other things, though:

ILYA SHAPIRO: To investigate, block, direct, regulate, compel, nullify, void, prevent, and prohibit various economic actions in cases of emergency.

ROUGH: Ilya Shapiro is the director of Constitutional Studies at the Manhattan Institute.
Missing from that list, he says:

SHAPIRO: The word “levy tariffs, or duties, or taxes” is not there.

The Trump administration argued that the statute’s language allowing him to regulate imports was enough to authorize tariffs.

SHAPIRO: The government’s backup argument was that “regulate importation” supports tariffs, because tariffs are a type of regulation, they said. But the court said that’s not correct.

The two words “regulate importation,” as the court put it, “cannot bear such weight.”

SHAPIRO: Anytime that the Congress authorizes regulations doesn’t mean that it gives authority to the designated agency also to raise taxes.

EICHER: Overall, six justices agreed the statute does not authorize what the president contends. They are: Chief Justice Roberts, joined by conservative Justices Neil Gorsuch and Amy Coney Barrett, and liberal Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson.

SHAPIRO: The one that got six votes was that the text of the statute, IEEPA, does not grant tax levying power. Period.

Three justices dissented. We’ll get to the dissent in just a moment, but first, let’s return to the six-justice majority.

Three of them said this:

SHAPIRO: Roberts, Gorsuch, and Barrett said this was a significant broad authority... that if Congress wants to delegate that kind of authority it has to be explicit or clear.

ROUGH: In other words, they relied on what’s known in legal lingo as the major-questions doctrine. That says that if the executive branch interprets a statute’s general language to give it the right to do something sweeping … something economically and politically significant, there’s a presumption against it. Congress’ authorization must be very specific. And it wasn’t here.

EICHER: But three other justices declined to go that far. Justice Kagan filed the concurring opinion, joined by Justices Sotomayor and Jackson, to say that we don’t need the major questions doctrine. The plain language of the statute is clear enough.

Tax expert Rothenberg explains the split among the six-justice majority this way:

ROTHENBERG: Roberts says we’ve got more than one arrow in our quiver, and the concurring judges would just rather rest on the single arrow of statutory interpretation.

ROUGH: Dissenting was Justice Brett Kavanaugh, joined by Justices Clarence Thomas and Samuel Alito. In what you might call a battle of the textualists, Kavanaugh said the statute’s language that allows the president to “regulate” imports does mean the president can impose tariffs. Tariffs are a means of regulating.

EICHER: Back in November, in the oral argument in the case, Justice Kavanaugh gave a clue as to where he’d land. He pointed out to the plaintiffs’ attorney that to interpret the statute to allow the president to take all sorts of economic actions but not allow the tariffs, makes no sense. 

Here’s a clip from the argument:

JUSTICE KAVANAUGH: Your interpretation of the statute, as she pointed out, would allow the president to shut down all trade with every other country in the world, or to impose some significant quota on imports from every other country in the world, but would not allow a 1 percent tariff. 

And that leaves, in the government's words, in its brief, an odd donut hole in the statute. Why would a rational Congress say, "yeah, we’re gonna give the president power to shut down trade"? I mean, think about the effects. But you’re admitting that power’s in there. But can’t do a 1% tariff. …that doesn't seem… to have a lot of common sense behind it.

ROUGH: Justice Kavanaugh relied on early U.S. history to point to other instances where a president’s power to impose tariffs has been upheld—

SHAPIRO: And that Congress has historically granted presidents tariff discretion. Which is true, but again, with more specificity.

EICHER: Con law expert Shapiro explaining he means by “more specificity,” that Congress historically has added limits and constraints.

SHAPIRO: I just think that the Court is saying, "look, if we were to allow this, there would be no limits on this power. Any president could wake up, declare an emergency, and levy any tariffs on anything in any amount. That can’t be the law."

But Justice Kavanaugh had a second argument in his dissent. Back now to Rothenberg:

ROTHENBERG: If it’s a matter of foreign policy, the president has so much leeway, the president can do it if it’s a matter of foreign policy.

ROUGH: Justice Kavanaugh also referred to the “mess” of practical consequences. The refund of billions of dollars that the government has collected from importers. An issue the Court did not address.

SHAPIRO: They didn’t say anything about how someone goes for a refund, what the process might be, how much they’re eligible for, whether there’s time limits. None of that. That’s because that wasn't the issue that was presented. It wasn’t briefed. No lower court had ruled on that.

Shapiro says the government was prepared for this ruling and has been looking for alternative options.

SHAPIRO: There are other provisions that allow national security tariffs, or reciprocal tariffs, or strategic temporary tariffs for all sorts of reasons. And I think that’s what the administration is going to go back to. 

Scott Bessent, the treasury secretary, has now for months been kind of priming the field in anticipation of such a ruling, noting that the government does have alternative methods of levying more targeted, which I think would be a better policy, for tariffs.

EICHER: Which is what happened, and more on that when David Bahnsen joins us in just a moment.

Overall, Shapiro says a big takeaway is that this ruling is narrow.

SHAPIRO: Now the court did not rule on whether there really was an emergency, or whether the ostensible reason for the emergency was properly connected to the tariffs. It didn’t get into that. … It merely said that IEEPA, this one particular statute, did not allow these kinds of tariffs.

ROUGH: Quickly, I’ll mention that along with Roberts’ principal opinion and Kavanaugh’s principal dissent, every other justice with the exception of Alito and Sotomayor, wrote his or her own separate concurrence or dissent.

Thomas’s dissent said Congress cannot delegate so-called “core powers” that touch on life, liberty, or property, but it can delegate non-core powers, like economic ones. 

And the last page of Justice Gorsuch’s concurrence contained a mini civics lesson. He addressed it to those who may be disappointed in the ruling. He said the framers of the Constitution made legislation hard and time consuming on purpose. But that deliberate process is aimed at trying to ensure our nation’s laws are well-thought-out.

And that’s this week’s Legal Docket.

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