Phil Magness and Marc Wheat examine “Trump’s tariff ‘plan B.'” A slice:
Since “Liberation Day” on April 2, 2025, the administration has pivoted from statute to statute for its tariff-of-the-month club to prolong its illegal regime of taxing imports. Many of its claims have been inconsistent and contrary to well-established economic history.
Under penalty of perjury, Commerce Secretary Howard Lutnick told the Federal Circuit that “without the viability of [International Emergency Economic Powers Act] tariffs, the United States would be weakened and lose the essential tool to address this national emergency most efficiently” (emphasis added).
Because of such claims, the courts allowed the government to collect tariff revenue while litigation continued. But the Supreme Court ultimately rejected Lutnick’s claims in February.
Yet, within hours of the Supreme Court’s decision striking down the IEEPA tariffs, the administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974. Several states and small businesses are currently challenging the Section 122 tariffs and the government’s attempts to conflate two technical terms that are not the same: a “balance of payments deficit” and a “trade deficit.” The solicitor general, representing the government, even argued in Learning Resources v. Trump that “trade deficits” are “conceptually distinct from balance-of-payments deficits.”
Section 122’s “balance of payments deficit” has never been used because the provision became obsolete in 1976 when the U.S. abandoned the Bretton Woods exchange rate system. A “balance of payments deficit” was a natural consequence of fixed exchange rates, when the value of the dollar was pegged to gold and when other foreign currencies were pegged to the dollar.
Now, not waiting for a final ruling on its Section 122 tariffs, the White House attempts to resurrect a dormant clause from the long-buried Smoot-Hawley Tariff Act, Section 338. The consequences of the administration’s tariff regime have already been similar to those of Smoot-Hawley in the Great Depression: an explosion of new or ramped-up lobbying contracts, job losses for families, and increased prices for many goods. Smoot-Hawley was disastrous then and is leading to the same problems now.
“The Supreme Court blocked it. They blocked it. But that didn’t stop me.” So said President Joe Biden in 2024 after the justices ruled against his effort to cancel $430 billion in student loan debt. He tried to use another legal authority to cancel debt, but that was ultimately blocked in court, too.
President Donald Trump is trying to do much the same thing with tariffs. He first imposed sweeping worldwide levies last year using the International Emergency Economic Powers Act of 1977. The Supreme Court ruled 6-3 in February that those tariffs were unlawful.
Since then, the administration has been trying to reimpose the border taxes in other ways. The latest method is to invoke Section 301 of the Trade Act of 1974. That law authorizes tariffs if the U.S. trade representative finds that a trading partner is engaging in certain unfair practices.
But the new strategy is also legally vulnerable, as a new lawsuit by 25 states in the U.S. Court of International Trade highlights. Yes, the law gives the USTR substantial discretion to impose tariffs in some circumstances to respond to particular abuses. But it can’t be a blanket authorization for whatever tariffs the president happens to want.
Dan Hannan decries the language games played today by the likes of NatCons and Groypers. A slice:
An equivalent semantic shift is now happening over “globalisation”. Until an eyeblink ago, that word meant removing barriers so that people were not penalised for, or prevented from, buying goods or services from outside their country. But, over the past decade or so, it has taken on a new meaning. A “globalist” is now someone who wants the world to be ruled from Davos or Brussels. He wants human rights courts to strike down national governments. He wants to send entitled “gimmegrants” across every border. He wants to destroy the West.
Again, the idea that the free flow of goods, services and ideas is itself part of the Western patrimony is not considered. Two completely contradictory notions — one to do with restricting the state’s power over the individual, the other to do with increasing it — are deliberately conflated.
For a lot of people under the age of 25, the older meanings of these words don’t register at all. Argue that tariffs are making us poorer, and they will ask why you want to flood the country with illegal immigrants.
But high earners in America’s Dairyland will take only so much badgering before they relocate. Wisconsin already has the second-highest top income tax rate in the Midwest, trailing only Minnesota’s 9.85 percent. And Wisconsin businesses face the third-highest rates in the region, behind Minnesota and Illinois. When businesses leave, they take with them not only tax revenue but also jobs and investment.
