Yay! A federal court – the U.S. Court of International Trade – yesterday afternoon unanimously struck down Trump’s “Liberation Day” and other IEEPA tariffs. GMU Scalia Law’s Ilya Somin, who played an instrumental role making the legal case against these unlawful tariffs, has more. A slice:
The US Court of International Trade just issued a unanimous ruling in the case against Trump’s “liberation day” tariffs filed by Liberty Justice Center and myself on behalf of five US businesses harmed by the tariffs. The ruling also covers the case filed by twelve states led by Oregon; they, too, have prevailed on all counts. All of Trump’s tariffs adopted under the International Emergency Economic Powers Act of 1977 IEEPA) are invalidated as beyond the scope of executive power, and their implementation blocked by a permanent injunction. In addition to striking down the “Liberation Day” tariffs challenged n our case (what the opinion refers to as the “Worldwide and Retaliatory Tariffs”), , the court also ruled against the fentanyl-related tariffs imposed on Canada, Mexico, and China (which were challenged in the Oregon case). See here for the court’s opinion.
It is worth noting that the panel include judges appointed by both Republican and Democratic presidents, including one (Judge Reif) appointed by Trump, one appointed by Reagan (Judge Restani), and one by Obama (Judge Katzmann).
“Dow Futures Rally After Court Blocks Trump’s Levies.”
Phil Magness celebrates the court’s liberation of Americans from Trump’s “Liberation Day” tariffs. A slice:
As of this writing, the court’s ruling orders the immediate termination of the existing IEEPA tariffs. The White House is almost certain to appeal, seeing as this outcome effectively takes away the president’s favorite new toy.
A lengthy appellate battle is likely in the months ahead, and will probably require a U.S. Supreme Court ruling before the IEEPA tariff menace is banished. Let May 28, 2025, serve as our true Liberation Day—a day that our economy was freed from punitive taxation and government by arbitrary executive decree.
Reversing the tariffs would be a positive development, both economically and as a matter of maintaining the constitutional order. So far as the latter was concerned, the extent of the “emergency” tariff-raising power claimed by the president did not impress the court:
The President’s assertion of tariff-making authority in the instant case, unbounded as it is by any limitation in duration or scope, exceeds any tariff authority delegated to the President under IEEPA.
Last month Mr. Trump acknowledged tariffs would mean higher prices for Americans. “Maybe the children will have two dolls instead of 30,” he said, admitting they’d “cost a couple of bucks more.” Commerce Secretary Howard Lutnick later contradicted him, saying, “Don’t buy the silly arguments that the U.S. consumer pays.” Instead, “businesses and the countries” exporting to the U.S. will “primarily eat the tariff.”
Maybe these apparent flip-flops were all planned by the master of the Art of the Deal. But to many, it looks like cleanup on aisle six.
Some of the president’s messaging runs smack dab into basic economics. Mr. Trump insists American companies absorb higher import costs. In a May 17 Truth Social post, he demanded Walmart “EAT THE TARIFFS” and “not charge valued customers ANYTHING.”
Walmart’s profit margin in April was 2.75%. If it does what Mr. Trump says, it can’t break even. It can’t absorb the cost of an imported pair of kids jeans inflated by the 46% tariff Mr. Trump threatens on Vietnam, or the 37% tariff for Bangladesh, or the 32% tariff on sneakers from Indonesia that Mr. Trump proposed. Other companies are in the same pickle. Target’s most recent reported margin was 3.95%, Best Buy’s was 2.23%. The president can blast all-caps posts all he likes, but inevitably parents will be unhappy with his tariffs when it’s time to outfit the kids for school.
Americans’ everyday experiences as we shop and work are already reinforcing that we—not the exporters or importers—will pay most of Mr. Trump’s tariffs.
Last weekend I went to my corner hardware store. The counterman said he was busy repricing 1,200 to 1,500 items. He said there were thousands more for which prices will go up. He didn’t like it but had no alternative.
George Will makes a powerful case that “the Trump administration is pure progressivism in action.” Two slices:
Today, statism seeps into everything, from universities to the John F. Kennedy Center for the Performing Arts. Government confidently unravels the fabric of world trade and uses tariffs to fine-tune personal consumption. Tax exemptions (on tips, on Social Security benefits; a subsidy for automakers via the deductibility of car loan interest) to placate discrete constituencies. Regarding debt, Democrats praise and practice what Republicans denounce and practice: The theory that our government, source of the world’s reserve currency, can create/borrow unlimited dollars to finance public appetites or purchase political advantages.
Today’s torrent of executive orders presages an insistence that, a 1974 law not withstanding, the president can, by impounding (refusing to spend) appropriated funds, treat Congress as a timorous expresser of mere aspirations. And, the administration’s congressional supporters are using a parliamentary maneuver (“reconciliation”) to marginalize filibusters, lest one prevent enactment of the president’s foremost desire, which is to add $5.2 trillion to the national debt over the next decade.
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Last week, the president, resembling a 19th-century schoolmarm (lacking only a gingham dress, alas), upbraided congressional Republicans as though they were third-graders neglecting their McGuffey Readers. He was peeved about their dilatory enactment of his agenda: ever-more-enormous annual deficits — $2 trillion is the new normal — to fund today’s ever-larger entitlement state.
After the bubble inevitably burst, Fannie and Freddie were placed under conservatorship by the Federal Housing Finance Agency. The conservatorship imposed rules aimed at preventing future taxpayer-funded bailouts and protecting the economy from government-fueled market distortions.
Now President Donald Trump’s appointee to lead that agency, Bill Pulte, is considering ending this conservatorship without addressing the core structural flaw that fueled the problem in the first place: implicit government guarantees backing all Fannie and Freddie mortgages. If Pulte proceeds without implementing real reform, taxpayers on Main Street are once again likely to be exposed to significant financial risks as they are conscripted into subsidizing lucrative deals for Wall Street.
Without genuine reform, the incentives and practices that led to the crisis remain unchanged, setting the stage for a repeat disaster.
Why are California’s gasoline prices the highest in America?
Here’s economist Daniel Waldenstrom on what he rightly calls “the inequality myth.”
