Such arbitrary taxation without representation is precisely what the Constitution’s Framers sought to prevent by vesting power over taxes and trade with Congress. Mr. Trump likes to say other countries pay his tariffs. But the tariff is paid by U.S. importers, which have to eat the cost or pass it along to customers.
As for the law, the U.S. has run a trade deficit for 50 years and deaths from fentanyl have been declining. How do these suddenly qualify as “national emergencies”? Even if the President deserves deference over what is an emergency, the Justices in Loper Bright (2024) stressed that courts needn’t defer to the executive’s statutory interpretation.
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The Trump Administration tries to leapfrog all of these statutory obstacles by citing the President’s Article II foreign-policy authority. Few conservatives are more deferential to presidential overseas authority than we are. But the power of the purse still belongs to Congress and can’t simply be wished away with the words “foreign policy.” Tariffs are taxes on Americans.
If the Court blesses this unlimited presidential tariff power, future Presidents will be able to cite emergencies to justify tariffs to pursue all kinds of policy goals. An all-too-likely example is a climate emergency to tax imports of countries with high CO2 emissions.
Since the IEEPA became law in 1977, the United States has successfully negotiated and implemented comprehensive trade agreements with countries around the world: 14 major free trade agreements (FTAs) with 20 countries, plus landmark multilateral deals like the Tokyo Round and the Uruguay Round, which converted the General Agreement on Tariffs and Trade into the World Trade Organization. The WTO now comprises 166 members, covering more than 98 percent of the global trade volume.
Not one of these agreements was completed with IEEPA tariffs being imposed or threatened. Even under the administration’s mercantilist logic about the superiority of exports to imports, these FTAs and multilateral agreements were a success: in virtually every agreement, our trading partners lowered their tariffs on American exports more than we reduced ours on their goods.
When the Trump administration’s lawyers go before the U.S. Supreme Court on Wednesday to argue a crucial case that will determine the limits of presidential tariff authority, they will be asking the justices to accept contradictory claims about the value of foreign investment in the United States.
In a brief filed with the court ahead of this week’s oral argument, the government’s attorneys argue that foreigners buying up American “assets” is a serious enough threat to require emergency executive powers over trade.
“By the end of 2024, foreigners owned approximately $24 trillion more of U.S. assets than Americans owned of foreign assets,” the administration argues. That imbalance has “weakened” the United States and “created an ongoing economic emergency of historic proportions.”
In the same brief—indeed, just four pages later—those same attorneys warn that undoing Trump’s tariffs would jeopardize “trillions of dollars” in foreign investment that the president has successfully negotiated. They point to $600 billion in investments pledged by the European Union and another $1 trillion promised by the governments of Japan and South Korea. Those investments, the administration argues, will “rectify past imbalances.”
In July, Federal Reserve economists estimated that US manufacturers will pay ~$39 – $71 billion each year just to comply with Trump’s tariffs – costs that have surely increased since then bc of new tariffs (copper, wood, etc.) & special deals.
Faced with mounting pressures not just from the domestic automakers and their unions, but also a protectionist (and Democrat) Congress poised to enact sweeping protectionist legislation, Reagan had a difficult choice before him. In his autobiography, he writes, “Although I intended to veto any bill Congress might pass imposing quotas on Japanese cars, I realized the problem wouldn’t go away even if I did.” “The problem” Reagan referred to here was not “Japanese imported cars.” It was the demand for protectionist measures from Congress and the union autoworkers.
Reagan understood that vetoing any protectionist bills that Congress sent him would only forestall the inevitable and use up valuable political capital in the process. He understood, however, that he needed to do something, so he established the Auto Task Force. At a meeting, Vice President George H.W. Bush reportedly said, “We’re all for free enterprise, but would any of us find fault if Japan announced without any request from us that they were going to voluntarily reduce their export of autos to America?” Thus, the idea of voluntary export restraint was born. Reagan dispatched his trade representative, Bill Brock, to help with discussions.
The ACA exchanges also didn’t work. The mandate was copied from European systems in which hefty penalties forced people to buy insurance, but the American version was defanged to make it more palatable. In 2010, the Congressional Budget Office projected that 21 million people would buy exchange policies in 2016. The actual number was 12.7 million. In 2017, Republicans effectively repealed the mandate entirely.
Because the mandate was so weak to begin with, this made less difference than many expected, but the number of people buying exchange policies still declined slowly. Democrats could have tried to reimpose a real mandate when they regained power in 2021, but they found it more politically expedient to just massively boost the subsidies, including offering them to families that made 400 percent of the federal poverty line. They did so under the guise of pandemic exigencies.
This had an electric effect on the exchanges, which saw enrollment more than double between 2019 and 2025. The lavish subsidies increased demand for health care while failing to increase the supply. Inevitably, this raised total costs. And now the bill is coming due.
Andrew Weintraub’s letter in the Wall Street Journal is spot-on correct:
Roland Fryer’s op-ed “The Economics of Culture” (Oct. 31) is an important reminder that the Nobel Prize committee again ignored the monumental contribution that Thomas Sowell, 95, has made to the history of economic thought. What are they waiting for?
