Learning Resources Inc. v Trump and Trump v V.O.S. Selections was the consolidated case in which the United States Supreme Court ruled Trump's tariffs under the 1977 International Emergency Economic Powers Act or IEEPA unconstitutional last month. In his concurring opinion, Justice Gorsuch hit the nail on the head when he wrote, "In a very real sense, then, when it comes to legislative power, Congress is the principle and executive officials are the agents." In plain English the constitution gives Congress and only Congress the power to enact taxes and tariffs are a tax, specifically a sales tax on imported goods. The nondelegation doctrine says that Congress cannot delegate its Constitutional authority to the Executive Branch or the President. Gorsuch also chastised both the conservatives who lost in the 6-3 decision and the liberals who concurred only part by writing, "If history is any guide, the tables will turn and the day will come when those disappointed by today's result will appreciate the legislative process for the bulwark of liberty it is."
Of course, Trump is not going to be stopped in implementing his idea that tariffs are the hammer to hit all nails by silly things like the Constitution or the Supreme Court. Within hours of the Court's ruling Trump decided to enact an across the board 10% tariff which he quickly raised to 15% under Section 122 of the Trade Act of 1974 which allows the President to enact tariffs of up to 15% for up to 150 days to "deal with large and serious United States balance-of-payments deficits". The problem there is that we haven't had a balance-of-payment deficit since we switched to floating exchange rates for currencies. Put simply, if we import more than we export or run a trade deficit, we export cash to make up the difference. Balance-of-payments deficits are definitially impossible. International econ 101. But it took nine months of litigation before tariffs under the IEEPA were ruled unconstitutional. It'll probably take another nine months of court battles before the Supreme Court rules that Trump's latest import scam is also unconstitutional.
Meanwhile the tariff taxes keep coming into the U.S. treasury. More litigation will be needed to determine whether tariffs collected unconstitutionally will need to be returned to those who paid them. Obviously it was importers who wrote the check to the U.S. treasury. But did they really pay the tax? Of course not. They mostly just marked up their retail prices to cover the cost of doing business. The real payers of the import taxes were consumers. You and me. Importers may eventually get reimbursed for the tariff taxes they paid. But do you think there is any chance at all of those importers passing on their refunds to their retail customers. I didn't think so. The only winners when tariffs or any other kind of taxes go up is the government, its bureaucrats, and perhaps a protected industry. Only people pay taxes and that's us. That's this week's Report From the Fields. I'm Richard Fields. See you again next week.