What Might the Fallout Be from SCOTUS Ruling on Tariffs?
BU scholars in business and Constitution law provide context about what happened—and what’s next
The Supreme Court last week said that President Trump exceeded his authority by levying tariffs on imports. Photo via AP Photo/Bryan Dozier/NurPhoto
What Might the Fallout Be from SCOTUS Ruling on Tariffs?
BU scholars in business and Constitution law provide context about what happened—and what’s next
What exactly did the United States Supreme Court rule when it struck down President Trump’s tariffs, and what might the economic fallout of that ruling be for American businesses?
Robert Tsai, a professor of law at Boston University’s School of Law and Harry Elwood Warren Memorial Scholar, teaches classes in constitutional law and presidential executive powers and is a leading scholar on the subject. Gregory Stoller, a master lecturer in strategy and innovation at BU’s Questrom School of Business, teaches courses on international entrepreneurship, small business development, and global management experience. He’s taking 25 students to China over spring break to meet with executives of 10 companies.
For both professors, the 6-3 Supreme Court decision provided ample fodder for classroom discussions around issues of constitutionality and free trade.
In its ruling, the Court said that the tariffs violated the 1977 International Emergency Economic Powers Act (IEEPA). Several states and businesses sued the administration, saying the Constitution empowers only Congress to impose taxes. Chief Justice John Roberts’ majority opinion declared, “The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope… In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.” After the court ruling, Trump imposed a global 15 percent temporary tariff under a different law.
BU Today asked the two Boston University experts for their take on the decision.
Q&A
with Robert Tsai and Gregory Stoller
BU Today: As a constitutional scholar, did the Supreme Court’s decision surprise you?
Robert Tsai: If you take constitutional structure and statutory interpretation seriously, then this is an easy case. The Constitution explicitly gives the power of taxation to Congress, and despite some arguments by the Trump administration’s lawyers, a tariff is a tax. That background makes the statute important because lazy or expansive readings of the IEEPA could completely destroy careful constitutional allocations of power. The majority of the justices said as much: the delegation of power by Congress to the president to “investigate, regulate…or prohibit” imports does not include the words “tariff” or “tax.” And if it did, it would very likely be unconstitutional and unavailable to the president as a lawful authority for his broad tariffs. At bottom, this is a straightforward case of statutory interpretation.
What’s surprising is that the issue splits the justices who have worked in the executive branch. [John] Roberts, [Neil] Gorsuch, and [Elena] Kagan line up against unilateral presidential power, while [Brett] Kavanaugh, [Samuel] Alito, and [Clarence] Thomas would have blessed the power Trump asserted.
Gregory Stoller: I’m not terribly surprised. I do a lot of media work, was interviewed on national radio several months prior, and predicted that eventually, economic conditions would “revert to the mean.” I don’t discuss religion or politics in my classes, as that’s not how I’m trained, so this opinion has nothing to do with whether a Republican, a Democrat, or an independent is in the White House. I simply believe in free trade and believe it’s the only way that countries can coexist with one another.
BU Today: Based on your research, what effect could this ruling have on the economy?
Stoller: I think it provides some much needed relief to small businesses. Up until about three months prior, businesses were taking a hit so they wouldn’t have to pass on price increases to their customers, and a lot of these increases came from the tariffs. In the past quarter, businesses have documented that they no longer have a choice, and prices have gone up.
BU Today: Can you explain what the Court cited in the Constitution to say that it does not give the president authority to exercise tariffs the way he did?
Tsai: Once the justices reaffirmed that a tariff is a tax, that constitutional power is Congress’ and cannot be usurped by others. That means that the Supreme Court found Trump’s theory of unilateral power to tariff would amount to a “transformative expansion” of constitutional authority toward the president.
I am pleasantly surprised that the majority rejected the dissenters’ efforts to treat “emergency” statutes differently. As Roberts reminded, “Emergencies tend to kindle emergencies”—meaning such arguments have been abused, and judges should not make things worse. This has been a serious problem, with many culprits (including Congress), but what the Court does and says today is a good start.