Donald Trump’s destructive “Liberation Day” tariffs, announced April 2, should result in a constructive judicial ruling that significantly sedates today’s hyperactive presidency. Next Thursday, a federal appeals court will hear oral arguments about this: May the president, by making a declaration (that he claims is exempt from judicial review) of a national “emergency” and “an unusual and extraordinary threat,” impose tariffs (taxes paid by U.S. consumers) whenever he wants, at whatever level he wants, against whatever country he wants, on whatever products he wants, for as long as he wants?
A unanimous lower court has said, essentially: Of course not. Eighteen organizations, spanning the jurisprudential spectrum, have filed amicus briefs opposing the president.
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The Supreme Court says the nondelegation doctrine, which undergirds the separation of powers, “bars Congress from transferring its legislative power to another branch of Government” without providing “an intelligible principle to guide the delegee’s use of discretion.” Today’s president insists that IEEPA grants presidents unbounded discretion in wielding a power that is neither granted to him by the Constitution nor delegable by Congress.
Constitutional scholar Philip Hamburger says the Constitution’s framers thought “the natural dividing line between legislative and nonlegislative power was between rules that bound subjects and those that did not.” Tariffs bind Americans seeking to purchase imports.
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The president claims his declaration of an “emergency” is unreviewable because it involves foreign relations. But tariffs, which have domestic consequences and purposes, properly are congressional exercises of a constitutionally enumerated power and must come from statutes.
Today’s president is a hare, darting here and there. The judiciary is generally a tortoise, slow because it is deliberative. But you know the fable. And here is a fact: This tariff case could markedly restrain this rampant presidency.
As George Will recounts in a recent column, Donald Trump has deployed a range of open-ended executive powers to reshape global supply chains at will, extract favors from firms seeking either exclusion or protection from tariffs, threaten price controls, effectively nationalize private companies, and more. When given the choice between spontaneous order — allowing private individuals to allocate and consume scarce resources as they see fit — or exercising personalist control over economic decisions, Trump often opts for the latter.
Through his newly announced “trade deal” with Japan — under which Americans will have the privilege of paying 15 percent more for Japanese goods than they did before — the president has taken to new heights his effort to micromanage the U.S. economy. Trump’s press secretary, Karoline Leavitt, says that the “centerpiece” of the deal is a new $550 billion investment fund that will pour Japanese money into private U.S. companies. The details of this fund — which Trump thinks of as a “signing bonus” — are astonishing. Let us go over how this thing is supposed to work, according to the White House:
Japan, already the greatest source of foreign direct investment in the United States, will put over half a trillion dollars into a new investment fund. That fund, in Leavitt’s words, will be invested in U.S. companies and projects “at President Trump’s discretion,” who will supposedly funnel Japan’s money to “key industries such as energy, semiconductors, critical minerals, pharmaceuticals and shipbuilding.” Once those investments start bearing income (assuming they ever do), the U.S. federal government “will retain 90 percent of the profits.”
I’m sorry, Japan is going to invest half a trillion dollars in America but can only keep 10 percent of the profits? And who gets 90 percent of the losses?
And Donald Trump is going to have unilateral control over how this money is invested? Without any law from Congress authorizing this fund?
At the time of writing, the U.S. has brokered only five trade deals: with the U.K., Vietnam, the Philippines, Indonesia, and Japan. In every case but the U.K., the agreed-upon tariff rates are higher than the baseline rate of 10 percent and are, in every case, markedly higher than they were in 2022, meaning Americans will pay more for goods from these countries than they would have three years ago.
To understand why, we return to 1776. The year Americans declared independence, the economist Adam Smith launched a revolution of his own, publishing The Wealth of Nations, an attack on the mercantilism that had been embraced by governments in that era. One aspect of this practice involved piling up gold reserves and restricting money outflows in a top-down effort to drive national prosperity. Smith rejected this idea. Wealth, he argued, is not in cash but in the capacity to produce and trade. He mocked the notion that sending money abroad made a nation poorer, calling these views “vulgar prejudices.” He wrote that even if all of a country’s money was exchanged for useful goods, that was no loss. Wealth flows back through trade, investment, and the trust of global exchange.
To the extent that concern about outflows of money has been part of the rationale for the introduction of the remittance tax, it signals a rebirth of this mercantilist fallacy. It treats money sent abroad not as part of global prosperity but as a taxable loss. It suggests that your right to property doesn’t depend on how you’ve earned it but on how you use it. When your love, duty, or generosity crosses a border, the government gets a claim to it — an extension too far of state power.
We are far, far away from the midcentury progressive attitude, which welcomed technological change as the handmaiden of abundance and increased leisure, or, for that matter, from the liberal optimism that permeated the culture of the 1950s and ’60s with tantalizing visions of flying cars and obedient robots.
Instead, today’s progressives seem to envision a socially liberal ecotopia of dense housing powered by renewable energy. This very much includes the progressive “abundance” advocates who are having a moment in the discourse. This is abundance as today’s progressives envision it, not as working-class people desire, who would prefer a big house in the suburbs with plenty of money and lots of nice stuff and perhaps a “big-ass truck” or two in the driveway. Here as elsewhere progressives are dedicated to progress as they define it, not as normal people would and as they themselves used to.
Noah Rothman rightly ridicules United Nations’ environmental idiocy.
Samuel Peterson tells the public-choice tale of bans on self-serve gasoline stations.
