Could Trump's Tariffs Derail the Economy? The Supreme Court's Potential Role

Donald Trump's election victory in 2024 was partly due to the Biden administration's struggle with early-term inflation. Now, as President-elect, Trump's proposed economic strategies may reignite the same inflationary pressures that previously hurt the Democrats.

Despite inheriting a robust economy with minimal inflation, Trump plans to impose tariffs ranging from 10 to 20 percent on all foreign goods, and an even steeper 60 percent on those from China. According to Yale's Budget Lab, this could hike consumer prices by 5.1 percent and potentially curtail economic growth by 1.4 percent. Further analysis by the Peterson Institute for International Economics suggests that when these tariffs are combined with Trump's other policies, like mass deportation, inflation could surge by up to 9.3 percent.

The Supreme Court's Possible Involvement

Trump's proposed tariffs are expected to be legally contested, potentially reaching the Supreme Court. Many businesses likely to suffer economically from these tariffs could initiate lawsuits.

This presents a challenge: will the Supreme Court allow Trump to implement policies that might undermine his administration, and could impede Republican goals for political dominance?

Trump's authority to impose such tariffs rests on several federal statutes that offer the president a wide latitude. These legal provisions are ambiguously worded, granting significant power to the executive branch. A historical precedent exists as well, with President Richard Nixon having imposed a 10 percent tariff on most foreign goods in 1971, a move then upheld by federal courts.

Judicial Limitations on Tariff Power

The Supreme Court's conservative majority holds considerable influence over blocking executive policies they find excessively ambitious. This was evident in their 2023 decision striking down Biden's student loan forgiveness, even though it had clear statutory backing.

The case against Nixon-style tariffs could hinge on this judicial ideology. The Court may view any presidential move that resurrects 2022's inflation levels as a significant economic undertaking warranting scrutiny.

Another question is whether the court will prioritize allegiance to Trump's administration over a potentially unpopular tariff move that could alienate voters and rejuvenate Democratic fortunes. However, considering the court's decisions on previous Trump-related matters, oversimplifying the outcomes based on legal merits could be misleading.

Legal Context and Presidential Authority

Tariffs are considered potent economic tools, often used by the U.S. to counteract foreign practices detrimental to national interests. The president's power to initiate such measures is extensive, provided a relevant federal agency deems it necessary.

Federal tariff laws emphasize procedural formalities rather than detailed tariff restrictions, allowing broad discretion post-compliance. Section 301 of the 1974 Trade Act is one such law, requiring findings by the U.S. trade representative, who must act upon vague criteria about foreign activities impeding U.S. commerce.

Another provision enables the president to introduce tariffs following a Department of Commerce investigation determining a national security threat from imports. This authority was exercised during Trump's first term to tax metals such as aluminum and steel.

The legal landscape for tariffs hasn't significantly altered since Nixon's era, but procedural compliance remains crucial, particularly after the Trump administration's previous pitfalls, like their failed attempt to terminate the Deferred Action for Childhood Arrivals initiative due to procedural flaws.

Possible Legal Objections

Trump's tariff plan might encounter legal challenges via the Supreme Court's 'major questions doctrine,' a controversial concept generally employed to counteract Biden's policies. The Court's rationale for adopting this doctrine remains ungrounded in explicit legislative or constitutional text, leaving it open to interpretation.

This doctrine implies that for substantial economic decisions, Congress must provide explicit legislative authority. Its vague application by the Court in past rulings leaves the doctrine's relevance to Trump's tariffs uncertain.

Two positions could be argued: a principled one advocating for impartial application of laws irrespective of the administration, and a cynical stance suggesting Republicans might steer clear of policies provoking inflation, which historically harms their political standing.

Constitutional Considerations

While Trump intends policies that could conflict with constitutional principles, tariffs per se do not violate the Constitution. They have been integral to U.S. economic policy for decades, supported by longstanding laws that authorize presidential control over them.

The impending tariff legal battle underscores a conundrum: a ruling against tariffs amplifies the Supreme Court's unelected power, yet a pro-tariff outcome risks widespread economic distress. Constitutionally, when an executive action is merely unwise but lawful, the judiciary's non-intervention is implied, leaving political ramifications to democratic processes.

As Trump contemplates following through on his tariffs, it sets the stage for a legal confrontation over the extent of presidential authority accorded by federal law.