A Tax Perspective on Executive Tariff Powers

• In Event: Legal Perspectives on the Trump Tariffs

Abstract

The President has dramatically expanded the use of tariff powers, based in part on the International Emergency Economic Powers Act of 1977 (IEEPA). This expansion is dramatic even though the President has exercised such powers in various ways since Congress first granted him authority to revise tariffs in 1890. Existing consideration of presidential tariff powers focuses on constitutional separation of powers and foreign affairs powers. But this leaves out important constitutional provisions relating to taxation, including the Origination Clause and the taxing powers clause.

This paper argues that the more a tariff operates as a revenue raising and public finance tool--and not as a foreign relations tool--more the tariff power properly belongs in the hands of Congress. In contrast, if a tariff is foreign policy in nature, this strengthens the argument that a grant by Congress is a plausible recognition of the President's constitutional affairs powers. For instance, a permanent and universal 10% tariff is more like a tax law. A temporary 145% tariff on goods from a single foreign country is more like a foreign policy law.

More generally, if a tariff’s purpose and effect is to cause foreign or domestic actors to act or refrain from acting, this suggests that the tariff is a foreign policy tool. In contrast, if a tariff’s purpose and effect is to raise significant revenue, including revenue that is material in Congressional budget negotiations, this suggests that the tariff is a tax policy tool. Another factor is the relative importance of tariffs to federal public finance overall. This can cause a constitutional ratcheting effect, meaning that the more tariffs replace other sources of federal tax revenue, the more the tariffs look like tax policy, and the less constitutional it is for the President to impose them.

Authors

• Susan Morse, The University of Texas School of Law

• Shu Yi Oei, Boston College Law School

• Diane Ring, Boston College Law School