US President Donald Trump’s taxes may not get a break in court.
Thursday evening, the United States Court of International Trade (CIT) beaten down Trump’s latest move to stop the loophole, the 10 percent global tariff that he charged earlier this year after the Supreme Court beaten down go to him before. Trump is now 0-5 in court decisions on his trade wars.
US President Donald Trump’s taxes may not get a break in court.
Thursday evening, the United States Court of International Trade (CIT) beaten down Trump’s latest move to stop the loophole, the 10 percent global tariff that he charged earlier this year after the Supreme Court beaten down go to him before. Trump is now 0-5 in court decisions on his trade wars.
CIT parties to dominate doesn’t mean Trump’s latest tariffs are dead; The relief was only for plaintiffs, and these import duties could last until July, when the Trump administration is expected to unveil backups. backup plan using a different part of the same half-century-old law.
But the court’s decision — like some of those that came before the tax, including the Supreme Court’s overturning — raised interesting and serious questions. Like: Can the president, contrary to the US Constitution, unilaterally raise taxes for almost any reason, let alone under a law written in the late Nixon years to address a problem that no longer exists? The majority of the court did not think so.
“This case turns on the meaning of Article 122 and whether the President claimed the existence of the conditions required by law to legally declare an additional payment from abroad. As discussed further below, the Presidential Proclamation fails to prove that those conditions have been met,” the majority ruled..
“A narrow reading of the statute would raise a non-representational issue, which would raise a constitutional question,” the court wrote, noting that when in doubt, any reading of the statute that does not violate the Constitution is preferable.
What was at stake in this case was that part of the Trade Act of 1974, which Congress passed after then-President Richard Nixon went against tariffs to combat a weak dollar and red numbers everywhere. For two decades before, the US had a “balance of payments” problem where foreigners were trading their US dollars for dwindling physical gold reserves. (The United States was still operating on the gold standard until 1971, meaning that every bill was backed by physical metal.) Section 122 of the Commerce Act of 1974 authorized the president to impose certain tariffs, for a few months, to address the balance of payments problem.
But – as most intelligent people are he noted– it is impossible to have a balance of payments problem when a country has a floating currency, like the United States and many countries today. No one raids Fort Knox and takes the gold. A dollar goes as far, or more usually below.
But there are also some very smart economists who argue that the United States has a problem balancing its accounts, be that as it may trade deficitor national debtor year fiscal deficit. So perhaps “equality of payments” is a broader term that can be applied to a negative economic situation more generally.
That is what the lawyers of the Trump administration argued in court.
“(T)he government seeks to defend the proclamation by arguing that “balance-of-payments deficits” is an enforceable phrase,” the court wrote, before firmly arguing that it was actually a narrow and well-defined phrase that Congress was well aware of when it wrote the bill.
Many cited the legislative history of the 1974 Trade Act to show that Congress meant specific things, none of which Trump explained in imposing his emergency tariffs. However, the dissenting judge noted that this argument would have had more weight if the exceptions had made it into final law, rather than being removed as unnecessary restrictions on the president’s power.
But there is a bigger picture here. Like the Supreme Court case earlier this year, the court was grappling with a fundamental constitutional issue: Parliament, by law, has the power to levy taxes, not the president. It is true that over the past century, Congress has delegated considerable authority to the executive branch to regulate business in a variety of ways, including taxation. But all those delegates had limits and protection; even Article 122, the essence of this matter, reduces the customs duty by 15 percent for 150 days, which ends in this case at the end of July.
The judicial victories that the Trump administration has sustained in its quest to wrest the power of the tax fund from Congress are important, not so much for the details of any case, but because they get to the bottom of the question: Is the United States a republic, or a monarchy?
This post is part of FP’s ongoing coverage of the Trump administration. Follow along here.
