Trump’s Use of National Security to Impose Tariffs Faces Court Test

President Trump has weaponized tariffs to upend the global rules of international trade — but can his policies withstand the peanut butter test?

On Wednesday, a three-judge panel, deliberating in a federal courtroom in Lower Manhattan, considered the most far-reaching legal challenge to the president’s aggressive use of national security to justify placing levies on steel and aluminum imports from Europe as well as from Canada, Mexico, China and other nations.

The case, filed by an alliance of steel importers, revolves around an important constitutional question: whether a provision of United States trade law, known as Section 232 of the Trade Expansion Act of 1962, gives the president too much power over taxes and tariffs — powers that the founding fathers explicitly granted to Congress.

Mr. Trump has used Section 232 to impose tariffs on foreign steel and aluminum after a Commerce Department investigation determined the metals pose a threat to national security by degrading the American industrial base. Mr. Trump has also initiated investigations into whether imports of uranium, as well as autos, pose a national security threat and should somehow be limited.

Judge Claire R. Kelly of the United States Court of International Trade quickly cut to the heart of the matter, asking the Trump administration’s legal team if it could think of a single product or service that the president did not have the authority to tariff in the name of national security.

“Could he, say, put a tariff on peanut butter?” Judge Kelly asked, peering over her glasses.

Tara Hogan, the Department of Justice lawyer handling the case, declined to answer the question in yes-or-no fashion. Instead, she countered with a lengthy explanation of the process, which includes a Commerce Department investigation, required to determine if anything, even peanut butter, was a substance necessary to preserve national security.

“O.K. But I did not hear an answer on the peanut butter,” said Alan B. Morrison, a George Washington University Law School professor who argued on behalf of the plaintiffs.

The constitutional challenge is considered something of a long shot in legal circles because the Supreme Court almost never overturns a congressional decision to delegate power to the executive branch.

“There are very few cases, but the precedents all suggest that Congress can delegate this authority to the president, and he has a wide discretion when it comes to issues of national security,” said Mark Wu, a professor at Harvard Law School who studies international trade issues. “The question here is whether the court is going to use this case to demarcate any limits on what the president can do when it comes to tariffs.”

Still, the issues raised in the case — the widening use of national security concerns to justify trade barriers — were deemed important enough to warrant the appointment of the three-judge panel, the first time the court has assigned more than a single judge to a trade case since 2005.

“It would be the first time since the early New Deal era that courts ruled that Congress went too far in delegating its lawmaking powers,” Todd N. Tucker, a political scientist with the progressive Roosevelt Institute, wrote this year on the Lawfare website. “This is but the latest way that Trump’s aberrant behavior is prompting reactions that undermine longstanding norms.”

The trade law’s provision has been used previously — before Mr. Trump took office, there had been 26 investigations into whether imports pose a risk to American national security. In six of those cases, the president imposed a trade action, such as quotas, according to the Congressional Research Service.

But, according to Ms. Hogan, no president had used Section 232 to impose tariffs before Mr. Trump placed tariffs of 25 percent and 10 percent on steel and aluminum imports this past spring.

In June, the American Institute of International Steel, an association of companies that trade with the affected countries, filed a lawsuit attacking the law itself, after a legal challenge to Mr. Trump’s authority to use it was dismissed this year.

“We are challenging the law because no president before Trump ever used the law like this,” Mr. Morrison said. “The law has an opening, and he has taken advantage of it. There are no limits on what he can do.”

The judges in the case, all appointed by President Barack Obama, seemed to acknowledge the constraints placed on them by Supreme Court precedents, including the landmark 1976 case FEA v. Algonquin SNG Inc., which upheld the broad use of national security as a justification to impose quotas and licensing fees on imports.

But they also questioned specific provisions of the 1962 law granting the executive branch nearly unfettered authority to impose tariffs or fees on trading partners, especially the exemption of presidential decisions from judicial review.

And they quickly moved beyond hypothetical peanut butter scenarios to the national security justifications for the aluminum and steel tariffs.

Judge Gary S. Katzmann grilled Mr. Trump’s lawyers repeatedly about a letter from Defense Secretary Jim Mattis, which supported the administration’s efforts to limit imports but said the action should be aimed more squarely at China, rather than at allies like Canada. Mr. Mattis, in the memo, said imports of steel and aluminum accounted for a negligible percentage of materials used in the production of military hardware.

“I’m scratching my head about your rationale,” he said.

It is not clear when the court will decide in the case. Both sides have suggested they will appeal directly to the Supreme Court if they lose.

New York Times
By: Glenn Thrush