Could "Liberation" Take Us Back to Congress?

“Liberation Week” was quite the wild ride. On Thursday, April 2, President Donald Trump announced, in an Executive Order, that the United States would shortly begin applying huge tariffs on imports from all the countries of the world. Democrats were apoplectic, but plenty of Republicans were also deeply unsettled, unsure of what, exactly, the President hoped to accomplish, given that many of his denunciations of U.S. trade deficits began to sound suspicious of all trade.

By Thursday, April 9, after a week-long rout of U.S. equities and debt, Trump announced that, at least for the next 90 days, he would settle for 10 percent tariffs on all countries except China, which would face a remarkable 125 percent tariff. Investors quickly sent stocks back up near their previous levels. Republicans on Capitol Hill collectively exhaled.

One might ask: why has the president of the United States been able to act as operator of this crazy roller coaster? After all, Article I, Section 8 assigns to Congress, not the President, the “power to lay and collect taxes, duties, imposts and excises.” The requirement that new taxes can only be imposed with the assent of the people’s duly elected representatives is central to the Anglo-American political tradition. The rejection of kingly imposition of duties is why we have a United States of America in the first place. So how on earth did Americans end up endowing one man with the power to decide whether to impose hundreds of billions of dollars’ worth of tariffs, or remove them, at his whim?

The story is less outrageous than you might think; in the twentieth century, legislators delegated their power to set duties because they, correctly, sensed that certain dysfunctions in their institution had led them to make bad trade policy, and they hoped the president would do better. For a long time, he did.

Before we get to that history, though, it is worth acknowledging that presidents have been actively involved in the execution of tariffs from early in our nation’s history, and this often required them to do more than manage federal customs agents. As the Napoleonic wars roiled Europe in the first decade of the 19th century, both Great Britain and France made demands on American ships that violated their rights as neutrals; when they failed to comply with these demands, they were subject to seizure (and their men sometimes to impressment in the British Navy). Angered by this situation, Congress passed the Non-Intercourse Act of 1809 just before Thomas Jefferson’s presidency ended. The law barred all imports from Great Britain and France, but this embargo was conditional. If either nation began respecting American shippers, the president could make a proclamation that hostile acts had ceased, which would lead to lifting the embargo on that nation. Before any such proclamation was made, that law expired, allowing imports from both countries to restart. But Congress soon passed another trade law, known as Macon’s Bill No. 2, which set out different conditions: if either Britain or France stopped violating U.S. shippers, a presidential proclamation would cause the U.S. to reimpose its embargo on the other power. In the event, in November 1810, President James Madison accepted Napoleon’s assurances, leading to a renewed embargo on British imports. (This was a poor choice, as it did little to help American shippers in Europe and contributed to the onset of the War of 1812.)

After the brig Aurora violated this embargo, the United States seized the ship’s cargo at New Orleans; the owner of the confiscated goods challenged the validity of the law, claiming that the president’s role in imposing the embargo made him, unconstitutionally, the effective legislator. In a brief but historic ruling, the Supreme Court held that Congress was entitled to enact conditional laws whose operation depended on findings of fact made by the executive. Note that Madison’s calculation here involved as much political judgment as fact-finding about the state of the world; yet the Court was untroubled. The precedent was set that Congress can make certain aspects of trade policy dependent on executive judgment, though, to be sure, the law left Madison no discretion as to the nature or extent of the action that would follow from his finding.

Mostly, throughout the 19th century and well into the 20th, Congress guarded its own power to set tariff rates quite jealously; as Douglas Irwin’s indispensable Clashing over Commerce recounts, it was among the premier political issues about which legislators contended. Protection of American industry was woven into the founding DNA of the Republican Party (inherited from the Whigs before them), but the particulars of policy were constantly being renegotiated through an intricate, power-sensitive process of logrolling. Republican legislators engineered the mother of all logrolls after handily winning the election of 1928. The House passed a bill in May 1929 that included 845 tariff increases against 82 decreases. The stock market crash of October that year did not deter Republicans from proceeding; in March 1930, the Senate passed its version with 620 increases and 202 cuts. The conference bill, negotiated and passed into law in June 1930, mostly reflected the House’s preference for higher tariff rates.

President Herbert Hoover signed that bill into law but was deeply skeptical of the Smoot-Hawley Act. Threatening a veto, he insisted that Congress give him a “flexible tariff” power that would allow for executive-initiated revisions based on recommendations by a bipartisan Tariff Commission, and so the final law included that provision. Hoover made modest use of the power, leading to only a few reductions during his single term. Meanwhile, the public believed (correctly) that Smoot-Hawley was a major contributor to the Depression. Franklin Roosevelt ran on tariff reduction, and after his election, Democrats duly delivered on that promise. But, conscious of legislators’ poor record on the issue, they did so by empowering the president with the Reciprocal Trade Agreements Act of 1934, which allowed reductions of up to 50 percent from Smoot-Hawley rates pursuant to bilateral trade agreements the president could negotiate. FDR negotiated more than 20 such agreements over the next decade, beginning a long era of presidentially-led movement toward free trade. President Harry Truman negotiated the General Agreement on Tariffs and Trade (GATT) in 1947, which Congress only very slowly came to accept.

The Congress of a new generation doubled down on presidential leadership with the Trade Expansion Act of 1962, which also contained Section 232, allowing for tariffs implemented for national security reasons. At the urging of President Richard Nixon, Congress gave the president yet greater powers with the Trade Act of 1974, which created a “fast track” procedure for Congress to consider trade agreements negotiated by the president. Section 301 of that act gave the president the ability to impose new tariffs when a foreign nation’s trade practices were deemed “unreasonable or discriminatory.”

With these two provisions in place, U.S. presidents had tools capable of quickly imposing a broad protectionist program. But while Ronald Reagan and George H.W. Bush both engaged in some targeted protectionism, it wasn’t until the first presidency of Donald Trump that these powers were employed to their fullest, with Section 232 used to launch steel and aluminum tariffs and Section 301 used to impose a panoply of tariffs on China. The Biden administration largely left those actions intact.

While the second Trump administration’s actions of the last few weeks thus build on a long record of presidential leadership, they nevertheless represent a new chapter—in part because they have an entirely novel legal basis. Trump has claimed the authority to rewrite tariff schedules because America’s trade deficit represents an “emergency” for the nation. This unlocks presidential powers under the International Economic Emergency Powers Act (IEEPA), a law heretofore used as the basis for economic sanctions but not for making trade policy, or so the theory goes. Trump has made it clear that the nature of this emergency requires the president to act as dealmaker-in-chief, which means he must be able to threaten, adjust, and readjust at the drop of a hat if he is to get the best deal for the American people and end our decades-long trade peonage.

To put the matter plainly, this is bunk, both as international economics and as statutory interpretation. It is also a constitutional abomination. Congress’s long reliance on the president to chart a course of free trade was honorable enough, but it was based on the notion that the president was more likely to think clearly about these matters than a bunch of parochially oriented legislators. For a variety of reasons, that premise has now been spectacularly exploded. No legislator ever intended IEEPA to give the president this sort of unilateral power to reorient the nation’s whole tax system, especially when the “emergency” is America importing more than it is exporting.

Congress can and must reclaim its constitutional authority over trade, lest the American economy find itself at the mercy of a capricious autarkcrat.

This is easier said than done, as with most prescriptions for reempowering Congress. Having discovered what IEEPA-justified rate-setting can do, Trump is unlikely to give up the power willingly, even if he finds it necessary to bend to the will of markets at various times. At least for now, enough Republicans will act to protect their party’s chief executive to make a straightforward reversal unlikely. The Supreme Court could, conceivably, declare the president’s interpretation of IEEPA unlawful, as the New Civil Liberties Alliance has already initiated such a challenge. But, over a somewhat longer time horizon, a few years of bad economic performance could transform the political landscape. Whereas the notorious deed of Senator Reed Smoot, Representative Willis Hawley, and their Republican colleagues set the stage for a paradigm shift favoring the president as principal trade policymaker, Trump’s liberation week of 2025 could plausibly do the opposite.

Philip Wallach is a senior fellow at the American Enterprise Institute and author of Why Congress (Oxford University Press, 2023).