Tariff Case Could Give Trump Massive New Fiscal Powers

If Supreme Court rules in president’s favor on tariffs, it could greenlight his raising other new tax revenue without Congress

By Greg Ip. Excerpts:

"If the court sides with Trump, it could hand the president sweeping fiscal authority long the purview of Congress. It could enable the president, by simply invoking an emergency with some foreign element, to justify almost any revenue measure in response: not just tariffs, but other taxes, too."

"Trump has said tariffs could replace income taxes, becoming Treasury’s primary source of revenue, as they were before 1913.

Last week, his budget office projected that tariffs would raise $3.9 trillion, or 1% of GDP, over the coming decade. That sure sounds permanent."

"he relied on the International Emergency Economic Powers Act of 1977" 

"That law was generally used to punish national-security threats such as Iran and Venezuela through sanctions. Three courts have already ruled that it doesn’t permit Trump to impose across-the-board, unlimited tariffs."

"If “regulate” can include tariffs, it could, according to several legal scholars, include any tax. “Any tax with foreign-policy implications would be within his authority,” said John Brooks, professor of tax law at Fordham University. “Why wouldn’t that apply to any tax he can conceive of, not just the tariffs?”"

"as recently as last year, the Supreme Court affirmed that the Constitution treats tariffs and income taxes similarly, that is, as “indirect taxes.”"

"Jeffrey Schwab, senior counsel at the Liberty Justice Center" [said] "“If ‘regulate’ can mean tax or tariff, does that mean all of a sudden it doesn’t even take a vote of Congress to implement a tax? That seems really bad.”"

"importers (such as retailers) remit the duty to the government. They can, in theory, persuade exporters to absorb some or all of the tariff, or pass it along to their customers. While who ultimately pays can’t be known precisely, several economists estimate that American businesses paid 50% to 60% of Trump’s tariffs to date, with the balance split roughly between exporters and consumers."

"these tariffs are not enshrined in statute, there’s no process to change them"