Background

On May 28,I commented The Court Unanimously Strikes Down Trump’s Global Tariffs, Here’s Why

The court cited nondelegation doctrine, the major questions doctrine, narrow authority, flaws in trafficking tariffs, and “unusual and extraordinary” condition imposed by the IEEPA itself.

The Court smashed this one out of the ballpark. By the way the ruling was unanimous, despite the fact that one of the judges was appointed by Trump, another by President Reagan.

Reciprocal Tariffs Dead

On June 2, I commented Trump Gets a Meaningless Stay on Tariff Ruling, What Are His Options?

Trump got a stay on reciprocal tariff rejections, but he has other options.

Trump Will Lose

One of my delusional readers said Trump would win this 9-0 in the Supreme Court.

There is almost no chance the Supreme Court will go along with such nonsense and it should be obvious why.

The three liberal judges will all be against Trump. I believe Chief Justice John Roberts and Justice Amy Coney Barrett are near-certain votes against Trump as well.

Justices John Roberts, Neil M. Gorsuch, Brett M. Kavanaugh, and Amy Coney Barrett have all ruled against Trump at times.

So start with 3 certain and pick 2 more.

Unanimous against Trump would not be surprising, but something like 8-1 or 7-2 may be more likely.

Trump’s Other Options

1. Section 232(b) of the Trade Expansion Act of 1962. Section 232(b) provides for the imposition of tariffs or quotas on imports that threaten to impair U.S. national security. Investigations may be self-initiated by the Department of Commerce (Commerce). They may also be initiated based on an application from an interested party or at the request of the head of another U.S. government agency. If Commerce finds that imports of a particular product or products threaten to impair U.S. national security, the president decides whether to impose tariffs or quotas on such imports.
2. Section 122 of the Trade Act of 1974. This statute authorizes the president to impose quotas and tariffs of as much as 15 percent for up to 150 days against one or more countries that have “large and serious” balance-of-payment surpluses with the United States.
3. Section 201 of the Trade Act of 1974. Section 201 permits the president to impose tariffs or quotas on imports of a particular product where there has been a surge of imports of that product. To have tariffs or quotas imposed under Section 201, the import surge must constitute a substantial cause of serious injury to the U.S. industry producing the product in question.
4. Section 301 of the Trade Act of 1974. Under Section 301, upon a finding that another country has denied the United States its rights under a trade agreement or has engaged in practices that are unjustifiable, unreasonable or discriminatory and burden or restrict U.S. commerce, the United States may impose tariffs and quotas against the foreign country’s imports. Section 301 investigations are conducted by the U.S. Trade Representative’s Office, which has the authority to impose duties and quotas and to suspend benefits granted to the United States’ trading partners under trade agreements.
5. The Trading With the Enemy Act (TWEA) and the International Emergency Economic Powers Act of 1977 (IEEPA). TWEA and IEEPA authorize the president to regulate all forms of international commerce and freeze assets in time of war (TWEA) or in response to “unusual or extraordinary” international threats to the national security, foreign policy or economy of the United States (IEEPA).
6. Anti-Dumping and Countervailing Duty Laws. Upon a finding that a U.S. industry is being “materially injured” or threatened with material injury by dumped or subsidized imports, the United States can impose anti-dumping (AD) or countervailing (CVD) duties to offset the level of dumping or subsidization that is occurring. Investigations may be initiated in response to a petition from a domestic industry or union, or may be self-initiated by Commerce. A number of industries have successfully brought investigations under these laws in recent years to address injury being caused by unfairly traded imports, and the brisk pace of cases and investigations is expected to continue as numerous industries continue to face overcapacity and other structural issues arising from subsidization and government intervention in markets.
7. Enforcement of Existing AD/CVD Orders and U.S. Customs Laws. Companies importing into the United States also should expect increased enforcement of existing AD and CVD orders as well as other requirements of the U.S. customs laws. Among other areas, U.S. Customs and Border Protection can be expected to increase enforcement actions against imports suspected of evading AD and CVD duties under the recently enacted Enforce and Protect Act of 2015 and other grants of enforcement authority

The above seven points are from a 2017 article on US Trade Policy and Enforcement

I added links in their list. Here are some issues based on reading the links.

Trade Act of 1974 Details

SEC. 122. BALANCE-OF-PAYMENTS AUTHORITY

To prevent significant appreciation of the dollar in foreign exchange markets, the President is authorized to proclaim, for a period of 150 days (unless such period is extended by Act of Congress)— (A) a temporary reduction (of not more than 5 percent ad valorem) in the rate of duty on any article; and (B) a temporary increase in the value or quantity of articles which may be imported under any import restriction.

Import restricting actions proclaimed pursuant to subsection (a) shall be applied consistently with the principle of nondiscriminatory treatment.

SEC. 201. ACTION TO FACILITATE POSITIVE ADJUSTMENT TO IMPORT
COMPETITION.

If the United States International Trade Commission (hereinafter referred to in this chapter as the ‘‘Commission’’) determines under section 202(b) that an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article, the President, in accordance with this chapter, shall take all appropriate and feasible action within his power which the President determines will facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs.

SEC. 301. ACTIONS BY UNITED STATES TRADE REPRESENTATIVE

(1) If the United States Trade Representative determines under section 304(a)(1) that— (A) the rights of the United States under any trade agreement are being denied; or (B) an act, policy, or practice of a foreign country— (i) violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or (ii) is unjustifiable and burdens or restricts United States commerce; the Trade Representative shall take action authorized in subsection (c), subject to the specific direction, if any, of the President regarding any such action, and shall take all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to enforce such rights or to obtain the elimination of such act, policy, or practice.

(c) SCOPE OF AUTHORITY.— (1) For purposes of carrying out the provisions of subsection (a) or (b) or section 306(c), the Trade Representative is authorized to— (A) suspend, withdraw, or prevent the application of, benefits of trade agreement concessions to carry out a trade agreement with the foreign country referred to in such subsection; (B) impose duties or other import restrictions on the goods of, and, notwithstanding any other provision of law, fees or restrictions on the services of, such foreign country for such time as the Trade Representative determines appropriate; (C) in a case in which the act, policy, or practice also fails to meet the eligibility criteria for receiving duty-free treatment under subsections (b) and (c) of section 502 of this Act, subsections (b) and (c) of section 212 of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2702(b) and (c)), or subsections (c) and (d) of section 203 of the Andean Trade Preference Act (19 U.S.C. 3202(c) and (d)), withdraw, limit, or suspend such treatment under such provisions, notwithstanding the provisions of subsection (a)(3) of this section; or (D) enter into binding agreements with such foreign country that commit such foreign country to— (i) eliminate, or phase out, the act, policy, or practice that is the subject of the action to be taken under subsection (a) or (b),(ii) eliminate any burden or restriction on United States commerce resulting from such act, policy, or practice, or (iii) provide the United States with compensatory trade benefits that— (I) are satisfactory to the Trade Representative, and (II) meet the requirements of paragraph (4)

[Mish Note section 301 has complications by referencing sections 302, 203, 304, and 306]

SEC. 303. CONSULTATION UPON INITIATION OF INVESTIGATION.

(a) IN GENERAL.— (1) On the date on which an investigation is initiated under section 302, the Trade Representative, on behalf of the United States, shall request consultations with the foreign country concerned regarding the issues involved in such investigation. (2) If the investigation initiated under section 302 involves a trade agreement and a mutually acceptable resolution is not reached before the earlier of— (A) the close of the consultation period, if any, specified in the trade agreement, or (B) the 150th day after the day on which consultation was commenced, the Trade Representative shall promptly request proceedings on the matter under the formal dispute settlement procedures provided under such agreement. (3) The Trade Representative shall seek information and advice from the petitioner (if any) and the appropriate committees established pursuant to section 135 in preparing United States presentations for consultations and dispute settlement proceedings.

Trade Act of 1974 Synopsis

The much ballyhooed Section 122 by Bloomberg and others appears toothless. It pertains to currency moves, arguably useless. And then Congress can disallow the move after 150 days, which I believe this Senate would.

Sections 201 and 301 are vague enough to mean anything except for the line that requires Trump to negotiate with trading partners for 150 days.

The Problem with Vague

The problem with vague is Trump will immediately run into issues discussed in Trump Gets a Meaningless Stay on Tariff Ruling, What Are His Options?

1. Trade deficits are neither unusual nor extraordinary, a condition set in the IEEPA.
2. The administration admitted using leverage to get a deal. The court noted the administration put on and took off tariffs multiple times. This is nothing anyone would do in an emergency.
3. The IEEPA contains specific wording to prevent the law from becoming another “essentially . . . unlimited grant of authority”.
4. The major questions doctrine says Congress cannot delegate its major constitutional duties to the executive.

Specifically, point 4 applies.

Major Questions Doctrine

The “Major Questions” doctrine is one of many reasons the Court of International Trade struck down Trump’s reciprocal tariffs.

It is also one of the reasons the Supreme Court struck down Biden’s $400 billion student loan forgiveness attempts.

Trump’s reciprocal tariffs was a $2 trillion push, much larger than Biden’s student loan forgiveness ploy.

While Trump would have some leeway against individual countries, if he tries to do huge blanket tariffs or overly excessive tariffs against any country, he will run smack into the major questions doctrine.

This assumes that I did not miss something in the Trade Act of 1974 that does not complicate matters even more.

The same line of thinking applies to all seven Trade Law Enforcement Options noted at the top of this post.

Lawmakers Need to Get Back Into the Game on Trade

I had penned the above as a draft over two weeks ago but somehow never published my analysis.

I was reminded of it today from an Op-Ed article by Thomas J. Duesterberg and Paul Sracic of the Hudson Institute on the Wall Street Journal.

Please consider Lawmakers Need to Get Back Into the Game on Trade

In an unambiguous and unanimous ruling, the U.S. Court of International Trade held that President Trump’s “reciprocal tariffs” and fentanyl tariff actions exceeded his constitutional and statutory authority. We believe the ruling will stand up under Supreme Court review. 

The trade court’s ruling states that the International Economic Emergency Powers Act, or IEEPA, can’t authorize sweeping tariffs without violating what is known as the nondelegation doctrine. A three-judge panel ruled that IEEPA doesn’t grant unlimited, unreviewable authority for the president to declare national emergencies unilaterally or impose tariffs arbitrarily. The ruling cited foundational Supreme Court cases such as Youngstown Sheet&Tube v. Sawyer, as well as more recent decisions such as Loper Bright Enterprises v. Raimondo, on improper delegation of authority from Congress to the executive branch. The court also invoked the “major questions doctrine” of the Roberts court as part of the argument against Mr. Trump’s claim of broad trade authority.

The court’s reasoning, when viewed in the context of Roberts-era jurisprudence, suggests that the justices won’t overturn the trade court’s decision.

Existing domestic trade laws—such as the antidumping and countervailing-duty (antisubsidy) authorities—have worked to prevent unfair competition and could be strengthened by Congress. In the first Trump administration broader problems of unfair trade practices were addressed by Section 301 of domestic law for the Phase I agreement with China. More rigorous enforcement of this agreement, and potentially others, will be time consuming but effective. We need a more equal, reciprocal playing field.

Chinese mercantilism, systematic subsidization of domestic industry and chronic technology theft have exposed the ineffectiveness of the World Trade Organization as a substitute for Mr. Trump’s unilateral trade actions. Given the hostility of Mr. Trump and the MAGA movement to multilateral agreements and the WTO, one alternative worth pursuing is some form of alternative trading arrangement among democratic, market-oriented systems.

Congress could more forcefully urge the White House to oppose this alternative economic and political order. The trade court’s ruling has exposed the inadequacy of the Trump administration’s unilateral approach to trade. Public support is weakening as consumer consequences of tariffs become more apparent. MAGA has alienated traditional allies and undermined global support for Mr. Trump’s stated goal of pushing back against Chinese mercantilism.

Both Trump-style unilateralism and WTO multilateralism are on life support. The constitutional balance of power between the legislative and executive branches has eroded under Mr. Trump. Congress ought to reassert its authority on trade. It’s the only way to get American leadership back on track.

Enjoy the Stay

Enjoy the stay if you like, because reciprocal tariffs will be dead later this month.

If the appeals court ruling is wide enough the Supreme Court may not even hear a further appeal.

Trump’s further options are limited by the problems noted above. In addition they will take time and potentially country-by-country negotiations.

If the economy is in recession, the last thing consumers will want is a stupid trade war that increases prices.

Meanwhile, Trump is certain to look for ways to extend his foolish trade wars that nobody will win. More accurately he already has.

Trump Will Double Steel and Aluminum Tariffs to 50 Percent

On May 31, I commented Trump Will Double Steel and Aluminum Tariffs to 50 Percent

Insistent that US manufacturers who use steel will pay still more, especially the auto industry and small businesses, Trump Says Steel and Aluminum Tariffs Will Double to 50%.

Steel and aluminum tariffs are incredibly stupid. However, they are far more likely to stick because the Supreme Court may not want to buck trump on matters of national security.

Thus, Trump can still do a lot of damage to the economy even if he cannot get away with his nonsensical reciprocal tariffs.

But 50 percent tariffs on steel are far less damaging than his global threats of 50 percent tariffs on the EU, 145 percent on China, 80 percent on Vietnam, and whatever the changing rate is on Mexico and Canada, all soon to be scrapped by the appeals court.

Two-TACO Trump Day on His Call to Xi Over Rare Earth Elements

Finally, please consider Two-TACO Trump Day on His Call to Xi Over Rare Earth Elements

Trump is hyping up his call with China’s Xi. But chalk up 2 more TACOs.

China holds the cards on rare earths and Trump will have to concede a lot if Xi play his cards correctly, and he will.

More TACOs coming.

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