SCOTUS Dubious About Trump Tariffs

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1:54Big League reliability for any business. That's genius. This is Bloomberg Law with June Grosso from Bloomberg Radio. It's one of the most important cases of the term, a test of presidential power where President Trump's signature economic policy is at stake. After nearly three hours of oral arguments, it appears that a majority of Supreme Court justices across the ideological spectrum are skeptical that Trump has the legal authority to impose billions of dollars of tariffs on goods from nearly every country. Chief Justice John Roberts and Justice Sonia Sotomayor said that tariffs are taxes and the Constitution gives taxing power to Congress.

2:44It's a congressional power, not a presidential power to tax. And you want to say tariffs are not taxes, but that's exactly what they are. They're generating money from American citizens, revenue. The vehicle is imposition of taxes on Americans, and that has always been the core power of Congress. Trump is arguing that an emergency powers law, the International Emergency Economic Powers Act, or IEPA, authorizes him to collect tens of billions of dollars in tariffs a month. AIPA gives the president an array of tools to address national security, foreign policy, and economic emergencies. But it doesn't mention tariffs, something many of the justices were quick to point out.

3:30Here are the Chief Justice and Justice Ketanji Brown-Jackson. But when I read the statute, it is telling the president exactly what he can do, investigate, block during the pendency of an investigation, regulate, direct, and compel, nullify, void, prevent, or prohibit. And I guess what is a little concerning to me is that your argument suggests that we should see the word imposed, the phrase imposed tariffs in that same series of things that the president could do. We don't see that word. Well, but the exercise of the power is to impose tariffs, right? And the statute doesn't use the word tariffs.

4:10And Justice Neil Gorsuch, a Trump appointee, expressed alarm at giving seemingly limitless power to presidents. So Congress is a practical matter. Can't get this power back once it's handed it over to the president. It's a one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people's elected representative. My guest is constitutional law expert Michael Dorff, a professor at Cornell Law School. Mike, give me your broad take on the oral arguments. It was difficult to handicap. It's clear to me that the three Democratic appointees are going to vote to affirm and rule for the plaintiffs.

4:50Justice Thomas and almost certainly Justice Alito are going to rule for the government. I think Justice Kavanaugh pretty strongly leans towards the government. And then the chief justice and justices Gorsuch and Barrett are harder to handicap because Gorsuch and Barrett especially asked difficult questions of each side and kind of have a theory of what each one of them is thinking. But it's very difficult to say. So I come out of this really quite uncertain as to what they're going to do. So a good deal of the argument consisted of an analysis of the text of AIPA. Several justices quizzed the Solicitor General on the text not mentioning tariffs.

5:32How do you think the Solicitor General handled that? Yeah, I thought he stuck with his core argument, which has a number of moving pieces. The first is that the term regulate importation can include tariffs, just as a matter of ordinary language, That's certainly true. He also relied on historical understandings dating back to the founding for some reason to think that that's how the word was understood. And he has a couple of modern cases. He's got the Nixon precedent under the Trading with the Enemy Act, and he's got another related case. I thought he had the hardest time dealing with what is really the plaintiff's best argument, and that is that when Congress has wanted to give the president tariff authority, it has said so expressly in lots of other statutes.

6:31And so the omission in this statute does seem to be rather glaring. So I thought he did a perfectly fine job basically rehashing what was in his brief. It seemed to me like some of the justices weren't satisfied with Sauer's answers, particularly Justice Amy Coney Barrett. You know, she kept pressing him and Justice Sotomayor said, answer the question. Yeah, so that was an important exchange. And I thought that Justice Barrett wasn't being quite fair to his argument, right, which was he said that not only did Nixon impose this, but a court of appeals found that Nixon had the authority. It's true, the Supreme Court denied cert.

7:16And then Justice Barrett said, well, it's just an intermediate court of appeals. Well, that that's true. But his argument is not that that ruling is binding on the Supreme Court. His argument is that when Congress copied the language from the Trading with the Enemy Act into the International Economic Emergencies Powers Act, it was aware that President Nixon had used this for tariff authority and that that had been affirmed. And so we should attribute to Congress an intention to carry over the meaning that had recently been on display. That's not a bad argument. My own view is that it should fail because even a good textualist cares about how Congress has used the terms elsewhere.

8:02But just sort of standing on its own, I thought his reliance on the Nixon president was pretty sensible. Justice Neil Gorsuch questioned the Solicitor General for something like 10 minutes. Some of the questioning seemed a little bit hostile. He questioned him about the extent of the authority Trump is claiming, saying, well, then can Congress just say we're tired of legislating or hand it off even the power to declare war to the president? I mean, he seemed more aggressive than most of the other justices in questioning the Solicitor General. Yeah, I think that's right. And I think it lines up with Justice Gorsuch's priors, which are very suspicious of broad delegations to the executive branch.

8:47He actually got a concession out of the Solicitor General. The SG sort of began by saying that neither the non-delegation doctrine nor the major questions doctrine applies with respect to the president's foreign affairs power. And pressing him, Justice Gorsuch got him to back off of that when he said, well, what if Congress just gave the president all of its power to regulate foreign commerce? You know, do whatever you want. We're sick of this. Or all of its power more generally. Could he do anything at all in international affairs? And Sauer basically said, well, no, that would be different. And so Gorsuch said, well, how could it be different?

9:26You said that it doesn't apply at all in foreign affairs. And so then I thought Justice Gorsuch did a nice job of saying, so what you're saying is it applies more deferentially, but the intelligible principle test, which Justice Gorsuch doesn't like, is already very deferential. You're going to say it's even more deferential than that? So based on that exchange, I initially had Justice Gorsuch in the sort of plaintiff's column. But then on the other side, he was pressing Neil Katyal very hard on just the text, right? So if you just look at the text, it does seem to encompass tariff authority. And there, in the same way that I thought it was interesting that the SG backed off a little bit, I thought Kotl would have been better served if he had backed off a little bit and just simply said, yeah, you're right.

10:16If you look at the text in isolation, it does encompass this power. But that's never how this court looks at statutory text, and it shouldn't in this case. Well, let me ask you this. As some of the justices are pointing out, Congress knew how to write the word tariff. They wanted tariffs to be included in all these other powers. Why not just put it there? Right. I think that is sort of the core common sense argument that the plaintiffs have, and it's a very good one. And I thought it was going to prevail. What leads me to be a little less certain about that is the turn the argument took near the end of Katyal's presentation when a combination of Justice Barrett and some of her colleagues pressed on what she said she wasn't calling but really was calling a greater includes the lesser power, right, which is, well, look, Congress clearly gave the president the power to ban all trade with any and all foreign countries.

11:10because that's the plain meaning of some of the terms that are in the statute. And that's an enormous delegation. If Congress did that, why would Congress want to deny to the president the much lesser power to just say, well, you can have trade with us, but it's going to be subject to some tariff and that therefore maybe Congress didn't mean to exclude tariffs. Maybe they just thought it was encompassed within the term regulate. So that's what gave me some pause because that's also not a crazy argument. I do think, and I'm going to put this on my blog tomorrow, that the way out of that, at least for Justice Gorsuch, may be that insofar as this law seems to give the president the power to declare an emergency whenever he wants, and then to ban all foreign trade or to do some subset of it, that's a violation of the non-delegation doctrine.

12:01And therefore, you can't read the statute that broadly. And we can deal with a ban on all trade when that comes up. Or you can say the president's declaration of an emergency is subject to some substantial review by the Supreme Court. There was a point earlier in the argument when Justice Kagan was saying, we're going to review only very deferentially the president's decision that there's an emergency. But, you know, I mean, let's be frank here. There is no emergency. At one point, Sauer said, well, you know, there's an existential threat. And it's not clear what he was talking about. Then he said, well, fentanyl is an existential threat.

12:36Well, even if fentanyl is an existential threat, of course, it is to people who are at risk of overdosing on it. There's no indication whatsoever that that was a legitimate justification for the tariffs on Canada, which is one of the reasons why it was invoked. You know, we get less than one percent of fentanyl from Canada. And, you know, Sauer also pointed to the fact that when President Trump was recently in Asia, he and Xi Jinping agreed to some reduction in Chinese precursor chemicals coming over for fentanyl. You know, that's not a trade agreement. It was an agreement to discuss. So there's all of this stuff in the background that seems kind of detached from reality.

13:15And the background is, well, the president's conducting foreign policy. The president is just imposing tariffs willy-nilly because he doesn't like some commercial that was run by the government of Ontario, because he doesn't like that Brazil is enforcing the law against Bolsonaro, whom he sees as a kindred spirit. The notion that this president is exercising this power in any way that remotely relates to legitimate emergencies is just fanciful. And to me, the question is, like, will that break through at all? Or are they going to do what they did in the immunity case and pretend that Trump is a normal president?

13:53Coming up next, I'll continue this conversation with Cornell Law professor Michael Dorff. What about the major questions doctrine that the court used to block many of President Joe Biden's initiatives? This is Bloomberg. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. not noise proof of how we can help companies get smarter by putting ai where it actually pays off deep in the work that moves the business let's create smarter business ibm support for the show comes from public.com if you're actively involved in your portfolio you probably catch yourself repeating the same actions buying the dip manually sweeping idle cash putting on a hedge on public you can now create ai agents that handle all these tasks on your behalf just describe what you want to do in plain English.

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17:06Trump says his tariffs are authorized under the 1977 International Emergency Economic Powers Act, which gives him broad authority to set and change import duties in an emergency. But Justice Elena Kagan questioned the Solicitor General, John Sauer, about the declared emergencies, referring to the many cases the administration has brought to the court on an emergency basis since Trump took office. And in fact, you know, we've had cases recently which deals with the president's emergency powers, and it turns out we're in emergencies everything all the time, about like half the world. Well, this particular emergency is particularly existential.

17:47as Executive Order 14257 says. And of course, no one disputes the existential nature of the Fennell crisis. I've been talking to Cornell Law School professor Michael Dorff. So let's talk about the major questions doctrine, which came up over and over. And at one point, Justice Gorsuch told Neil Katyal, the attorney for the small businesses, I don't think you can win without it. And Chief Justice John Roberts indicated that he saw the case as being governed by the major questions doctrine. Yeah, so the major questions doctrine originates in some cases a couple of decades ago, but it really took its current shape in a case from a few years ago called West Virginia against EPA.

18:29And the basic idea is that if you've got a statute that the federal executive branch or the president claims gives them the power to regulate some gigantic area, like a big portion of the economy, which is clearly going on here, then the president needs to point to specific authorization for what he's doing in the statute. It's a way of reading the statute to say, we're not going to presume that Congress delegated enormous power to the president unless Congress did so clearly. So in lawyer speak, the major questions doctrine can be understood as a kind of clear statement rule. So that's the background.

19:19Now, there's a there's a kind of technical debate between different justices about what exactly the major questions doctrine is. So Justice Barrett has said that she thinks it is simply an interpretive canon. That is to say, it's out there. It's a way of us figuring out what Congress actually intended in this statute, because, you know, Congress writes statutes. Would they have, you know, meant to give all this power without saying explicitly so? It relates back to something Justice Scalia said in a much earlier case, which is Congress doesn't hide elephants in mouse holes, right? Just a basic idea of how you get at what Congress intended.

20:02That's one view of the major questions doctrine. Another view of the major questions doctrine is that it is a kind of subconstitutional way of implementing the non-delegation doctrine, the notion that Congress can't give away its lawmaking power. It's got to provide an intelligible principle. And so if there's some very monumental exercise of power, we're not going to see Congress as having given that to the president without explicit language, because the explicit language is what will provide the intelligible principle. In the absence of that, we will just assume the power hasn't been delegated.

20:40That's what I mean by saying that it's related to this constitutional principle. So there's that debate. At one point, Neil Katyal seemed to lean into the Barrett position to say, well, it's just a matter of figuring out what Congress was up to. It doesn't really matter for this case that he can win regardless of what the nature of the major questions doctrine is. When Justice Gorsuch said to him, I don't think you can win without the major questions doctrine, I think what he was getting at was that the statute just taken at face value and uses the word regulate, which historically has, at least in some contexts, included the power to impose tariffs.

21:20I should say, I think Justice Gorsuch is wrong about that. I mean, he might be right as a prediction, but I think he's wrong in that I think Cotill has a good argument that we don't need the major questions doctrine, but we also don't, we never read a statute literally and in isolation. That is, the text of the statute read against the backdrop of all these other statutes Congress has enacted where it used the word tariff or duty or custom or something like that and didn't use it here tells us about the literal meaning of the language here. So that I think there is a textualist answer that doesn't rely on the major questions doctrine under which the plaintiffs win.

22:03But, you know, I'm just making an assessment. If Justice Scorsuch thinks that they can't win without the major questions doctrine, then that suggests that if Cotill's going to win, it's going to be with the major questions doctrine. So, I mean, the conservative justices use the major questions doctrine to block President Biden in his initiatives on student loan forgiveness, coronavirus vaccine mandates, and climate change. How would they reconcile it if they allow President Trump to exercise sweeping emergency powers with these global tariffs? Right. Well, so if they want to reconcile it, I guess.

22:44So the short answer is I don't think they can in a way that is persuasive to me. But, you know, before the Supreme Court overruled the doctrine of Chevron deference to administrative agencies in the Loper-Bright case a year and a half ago, Even then, there was a lot of scholarship showing, I think persuasively, that the real meaning of the Chevron Deference Doctrine was the court deferred to decisions it liked and didn't defer to decisions it didn't like. And that had a political valence to it. I think it would be child's play to write an opinion here that says, of course, we have the major questions doctrine.

23:25And what that requires is a clear delegation here. There is a clear delegation because regulate historically has included the power to have tariffs and so forth. Right. That is the threshold for applying the major questions doctrine is a finding that Congress didn't clearly delegate. So they would just say, well, Congress here in the text clearly did delegate. I'm not saying that would be persuasive, but I think that's that's what they would do. And where did the you mentioned the non delegation doctrine? Will that play in here? Oh, sure. So, I mean, that was the line of questioning that Justice Gorsuch was pursuing against the Solicitor General, which is he wanted him to get the SG to admit and successfully got him to admit that under the government's theory of the case, Congress could give to the president the authority to regulate the entire economy.

24:23If there's any non-delegation doctrine at all, right, there's no intelligible principle of Congress saying, hey, if you think it's a good idea, do whatever you want with respect to foreign trade. And that's why Sauer, the SG, eventually backed off of this position that there's no non-delegation doctrine in this area. So you wouldn't be surprised then if the court ends up upholding Trump's ability to impose these tariffs under IEPA? I wouldn't be surprised with the result either way. Again, as I said, I think that given my priors, I thought that the result of the argument is that the plaintiff should win.

25:04That's what I thought before the argument. And I was heartened by the questions that at least three of the conservative justices asked of the Solicitor General. But this turn that the argument took near the end suggests to me that it's certainly not a sure thing. Anything else that struck you, Mike? One thing. So in my preview of the case on my blog on Monday, I pointed to some remarkable statements very early in the government's opening brief, quoting President Trump about how magnificent these tariffs are. And I thought that was potentially counterproductive because, you know, it included, you know, typical Trumpian rhetoric about how our country is, you know, going to hell in a handbasket.

25:53And, you know, thanks to me and my beautiful tariffs, everything's working out. But if you get rid of this, it'll be, you know, Armageddon. I'm not really exaggerating much. I'm just not using literal language. And, you know, it's just it was over the top rhetoric. And it was also economically illiterate. Right. the claim that this is doing wonders for the economy. And I noticed during the course of the argument that Sauer would occasionally give versions of that, not quite as over the top as in the brief. And he seemed to get no reaction at all from any of the justices, except for Justice Kavanaugh, who did seem to give some credit to Trump for getting various policies adopted in virtue of this.

26:37He pointed to the India tariffs as serving, you know, the foreign policy goal of getting Russia to change its stand in the war against Ukraine and, you know, the effect on the fentanyl precursors with China. But for the most part, it struck me that the reality of what's going on, which is, you know, this mad king randomly imposing tariffs and then taking them off because of his whims didn't really penetrate. And I think that's probably good for the government's case because the more that you look at what's really going on here, the less it looks like any kind of sensible policy. We'll see what the decision is.

27:15Thanks so much, Mike. That's Professor Michael Dorff of Cornell Law School. Coming up next on the Bloomberg Law Show, we'll talk to a trade lawyer about the oral arguments. The U.S. Supreme Court appeared skeptical of President Donald Trump's sweeping global tariffs, as key justices suggested he'd overstepped his authority with his signature economic policy. My guest is Timothy Brightbell, partner and co-chair of the International Trade Practice at Wiley-Rhine. Tim, tell us what's at stake in this case. This case involves the centerpiece of President Trump's economic agenda. This argument is the biggest trade case the Supreme Court has ever heard, and it goes straight to the key constitutional issue of who has the power to impose tariffs, the U.S.

28:08Congress or the president. President Trump says the law that he used, the International Emergency Economic Powers Act, gives him the power to regulate imports and that that includes the power to impose tariffs, including fentanyl tariffs on China, Canada and Mexico and reciprocal economic tariffs on almost all countries. Whereas the plaintiffs in this case say that Congress has that power and cannot delegate that power and that IEPA, which has never before been used to impose tariffs, does not include that power and authority. So that is what is at stake. And, of course, the tariffs under IEPA have led to collection of hundreds of billions of dollars of tariffs already.

28:53So it's very high economic stakes for the companies and industries that have paid those tariffs as well. Let's talk about some of the analysis during the oral arguments. And, you know, there's always a textual analysis these days. And some of the justices concerns that the text of the statute doesn't mention the word tariffs at all. Exactly. The argument focused quite heavily on this law used by President Trump, IEPA, and whether that law, which gives the president the power to regulate imports, also includes the power to impose tariffs. That really dominated most of the hearing, and the justices asked very difficult questions on both sides.