Economic Effects, Uncertainty, and China Relations

John is joined by Professor Mark Wu, the Henry L. Stimson Professor at Harvard Law School, an expert in international trade and international economic law.  They discuss the legal and geopolitical implications of President Trump’s tariff strategy.  The President’s approach is rooted in a belief that the post-1970s international trade regime, which the U.S. helped build, has been exploited by foreign powers to the detriment of American interests, particularly the manufacturing sector and working-class communities.  The administration intends to leverage America’s market dominance and security alliances to pressure trading partners into more favorable terms, including opening their markets to exports and investing in America.

To legally impose many of these tariffs, the President has relied on statutory authorities that Congress delegated to the executive branch, such as Section 232 of the Trade Expansion Act of 1962 (covering national security issues from the importation of goods), Section 301 of the Trade Act of 1974 (covering unfair trade practices by  foreign countries), and the International Emergency Economic Powers Act (IEEPA), which permits regulation of imports during a declared national emergency.  Unlike prior administrations, Trump has used IEEPA not only to declare national emergencies—such as the opioid crisis and trade deficits—but also to impose sweeping tariffs in response.

These actions have sparked a series of legal challenges.  Several importers and states have filed suits arguing that the president overstepped his authority under IEEPA.  Courts are now scrutinizing whether this use of IEEPA constitutes an overly broad delegation of congressional power and whether the tariffs align with the IEEPA’s statutory language.  The Court of International Trade ruled against the administration on this issue.  That case is now before the Federal Circuit, which heard the appeal en banc.  Whatever the outcome, the Supreme Court is likely to weigh in.

Even if tariffs under the IEEPA are barred by the courts, the administration has other tools at its disposal to achieve the same outcome, including imposing tariffs under Section 232, imposing tariffs under Section 301, and seeking additional legislation from Congress authorizing tariffs against specific countries.

Regardless of legal outcomes, the global trade regime has fundamentally changed.  There will be no going back to the pre-Trump regime.  Traditional alliances have been strained, other countries are adapting to long-term U.S. unpredictability, and legal precedents set here could impact more than trade law.

Podcast Link: Law-disrupted.fm
Host: John B. Quinn
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi