President Donald Trump shows no signs of changing course on tariffs after two courts said he doesn’t have the broad tax authority he thinks he has to reorder global trade.
On Wednesday, Trump said he’d like to possibly see tariff revenue replace income tax revenue, something that hasn’t happened since the nineteenth century. Since 1913, most U.S. revenue has come from federal income taxes.
“The tariffs are vital to the success of this country,” Trump said Wednesday. “Our country has a chance to be unbelievably rich again, but it can also be unbelievably poor again.”
Trump said the fate of the nation rests with the Supreme Court.
“If we don’t win that case, our country is going to suffer so greatly,” the president said during an Oval Office meeting. “But I think we’re going to have a big victory.”
Two courts have already said the 1977 International Emergency Economic Powers Act doesn’t give the president unbounded tariff authority. The 1977 law doesn’t mention tariffs.
Last Friday, the U.S. Court of Appeals for the Federal Circuit affirmed a previous lower court ruling, but said Trump’s tariffs could remain in place while the administration appeals to the U.S. Supreme Court.
In the 7-4 decision, the majority said that tariff authority rests with Congress.
In their dissent, President Barack Obama appointees Richard Taranto and Raymond Chen and George W. Bush appointees Kimberly Moore and Sharon Prost disagreed “with the majority’s conclusion on the issue of the tariffs’ legality.”
“IEEPA’s language, as confirmed by its history, authorizes tariffs to regulate importation – a conclusion that the majority does not squarely reject, but Judge Cunningham and those who join her opinion do,” the minority judges wrote. “IEEPA embodies an eyes-open congressional grant of broad emergency authority in this foreign-affairs realm, which unsurprisingly extends beyond authorities available under non-emergency laws, and Congress confirmed the understood breadth by tying IEEPA’s authority to particularly demanding procedural requirements for keeping Congress informed.”
Trump said Tuesday the Department of Justice would bring his tariff case to the U.S. Supreme Court on Wednesday. However, that court filing had not happened as of late Wednesday afternoon.
Trump said he would ask the nation’s highest court for a fast review.
New tariffs raised $58.5 billion in revenue between January and June of this year before accounting for income and payroll tax offsets, according to an analysis of federal data from the Penn Wharton Budget Model. The study found that the average effective tariff rate increased to 9.14% in June from 2.2% in January, when Trump returned to office.
Trump has said he wants to use tariffs to restore manufacturing jobs lost to lower-wage countries in decades past, shift the tax burden away from U.S. families and pay down the national debt.
A tariff is a tax on imported goods paid by the person or company that imports the goods. The importer can absorb the cost of the tariffs or try to pass the cost on to consumers through higher prices.
Economists, businesses and some public companies have warned that tariffs could raise prices on a wide range of consumer products.
