The US Court of International Trade (USCIT) ruled against president Trump’s tariff policy executed globally under the International Emergency Economic Powers Act, 1977 (IEEPA, 1977) marking a watershed moment in the constitutional evolution of presidential authority over imposing tariffs. The article compares Trump’s historical imposition of “trafficking tariffs and retaliatory tariffs” with “Nixon shock”, which relates to 1971 import surcharge focusing on how constitutional doctrine and judicial power have evolved to constrain executive authority over international commerce. The author aims to examine how evolving jurisprudence has altered, particularly the “doctrine of non-delegation” and “separation of powers” altering presidential economic authority.

While both presidents faced similar economic pressures and invoked emergency powers for universal tariffs, how—and why—did legal jurisprudence shift to limit executive discretion in favor of Congress’s constitutional role in trade policy?

However, it is important to note that these conclusions should be viewed tentatively, as the matter remains before the Federal Circuit to decide on significant doctrinal disputes regarding IEEPA’s scope and the constitutional limits of presidential emergency powers.

BACKGROUND

On August 15, 1971, President Richard Nixon declared a national emergency and imposed a 10% tariff on all imports worldwide, which was an unprecedented move altering the then trade policy.

These actions were enforced through the provisions of Trading with the Enemy Act(TWEA), 1917, section 5(b) which allowed the president to regulate imports with enemy nations imposing universal tariffs as a part of broader economic measures aimed at addressing the then ongoing balance of payments crisis what became known as the “Nixon shock”.

Now almost a century later President Donald Trump rolled out a trade policy triggering global controversy as a part of  “Liberation day” policy. Maybe taking inspiration from ‘Nixon Shock’, the policy imposed 10% import tariffs as a baseline surcharge globally. The unprecedented move which called for global attention was its ‘trafficking tariffs’ and ‘reciprocal and retaliatory tariff’ to more than 50% on 57 countries including India.

On Jan 20, 2025, the president issued executive order 14157 and Proclamation 10886 declaring national emergency under IEEPA to address national threats like international cartels, drug trafficking, violence at southern borders. Especially giving a heavy blow to China through Executive Order 14259, imposing upto 145%, later reducing to 30% due to similar actions taken by China.

However, unlike Nixon’s Shock, Trump’s tariff policy faced judicial backlash with USCIT passing a stay order on worldwide retaliatory and trafficking tariffs declaring them unconstitutional. On May 28 , USCIT declared Trump overstepped his authority by imposing the “trafficking tariffs” and “reciprocal tariffs”, ruling that the congress has the sole authority to levy taxes including tariffs. The ruling reflects an evolution in judicial interpretation of constitutional doctrine governing executive emergency powers.

The matter is now on appeal before the U.S. Court of Appeals for the Federal Circuit, which is yet to decide the president’s authority under IEEPA to impose tariffs for a reason beyond directly addressing the cited emergency. So as of now we have a lower court’s decision which is likely to impact the jurisprudence on presidential powers. The article traces the historical journey from Nixon’s successful invocation of emergency tariff to Trump’s authority being objected to and how imposing universal emergency tariffs from time to time received a varied court opinion. However, it is crucial to note that even though the matter is now listed before the Federal Circuit Court, the lower court’s response to these complex constitutional questions may influence future jurisprudence.

THE NIXON SHOCK- EMERGENCY AUTHORITY IN THE 1971 ECONOMIC CRISIS

The Nixon shock was a series of economic measures taken due to the then ongoing economic crisis including rising inflation, trade deficit, job crisis, currency manipulation concerns and unfair trade practices. The steps included imposing a temporary 10% universal tariffs on imports and unilateral cancellation of direct international convertibility of US Dollar in gold among other measures. The Proclamation 4074 imposing these policies was temporary in nature designed to get a higher bargaining power in international monetary negotiations.

Nixon’s imposition was enforced through Trading with Enemies Act 1917(TWEA 1917), which is a wartime statute, later amended to include peacetime economic emergencies. The great depression led congress to delegate the duties under TWEA 1917 to the president. The court generally accepted the delegation of congressional powers upon the president without applying the scrutiny as applied today. The economic emergency seemed genuine since growing balance of payments deficits threatened Bretton Woods Systems as the US did not have enough gold to cover dollar holdings globally.

The landscape of 1971 was different from today’s judicial environment. Post World War 2 the judicial interference over the executive powers over emergency authority particularly in foreign affairs and economic policy was meagre. The non-delegation doctrine largely remained dormant during this period and the court did not object to the constitutional powers granted to the congress, exercised by the president and until now the courts did not scrutinize on the ‘major questions doctrine’ to actions of delegated authority.

The Nixon shock was challenged in USA v Yoshida International Inc., the court of Customs and Patent Appeals upheld presidential authority under TWEA 1917. The court emphasized on the temporary nature of Nixon’s trade policy. The ruling also established a relatively permissive standard for emergency justifications accepting broad economic rationales without demanding specific nexus between the emergency and the responsive measures.

The court took a narrower view by not stepping on the presidential executive powers granted under 5(b) of TWEA ‘power to regulate imports’ confirming with the view that such an act to impose tariffs was well within the statutory provision of the act, ruling that the broad and flexible construction given to §5(b) is consistent with the intent of the congress and purpose of the act. Even if such a provision granted unregulated executive powers in the hand of an unscrupulous president willing to impose emergency when it does not actually exist, the delegation given by the congress cannot be questioned by the courts also a concept noted in Norman v. B. O.R. Co.,294 U.S. 240, 297, 55 S.Ct. 407, 411, 79 L.Ed. 885 (1935). Therefore, the court generally accepted the delegation of congressional powers upon the president without applying the scrutiny as applied today. By applying the expansive interpretation principles to emergency statutes, the court based its judgement on the presumption to grant larger delegation over matters during crisis situations.

STATUTORY EVOLUTION

TWEA 1971’s lack of oversight violated constitutional balance allowing presidents to act arbitrarily without much congressional interference. Between 1945 and 1970s TWEA,1917 imposed several sanctions as a part of the US Cold War.  The 1970s witnessed unchecked executive emergency powers which ultimately lead to passing National Emergencies Act, 1976(NEA, 1976) and International Emergency Economic Powers Act, 1977 (IEEPA,1977). These acts implemented provisions for compliances such as reporting requirements and termination mechanism to reassert the role of the congress. Soon after the  USA v Yoshida International Inc. judgement passed in 1971, the congress realized the unregulated authority over delegation under TWEA 1971 which led to legislative actions limiting presidential executive powers to prevent abuse.

Congress enacted IEEPA in 1977 to limit the emergency economic powers that it had delegated to the President under the Trading with the Enemy Act (TWEA).  TWEA, 1917 was amended to war time situations only by amending section 5(b). Implementation of IEEPA reveals the congressional intent to restrict the scope compared to TWEA’s unrestricted powers. The court recently while determining Trump’s imposition of tariffs under IEEPA in case of V.O.S. Selections, Inc. et al. v. United States of America et al. and The State of Oregon et al. v. United States stated that this statute is not supposed to be used in non-emergency situations since the legislature has provided other routes such as section 122 of Trade Act, 1974.

The court also pointed out that  the imposition of ‘trafficking tariffs’ does not satisfy 50 USC §1701, which states that IEEPA applies to “unusual and extraordinary threats to national security, foreign policy or economy”. And by cataloging specific emergency powers, NEA, 1976 ensures that a declaration for one purpose does not activate all possible executive powers, a concern raised by the 1973 Senate investigation.

TRUMP’S SMART MOVE

Trump imposed worldwide tariffs under 50 U.S.C. 1701, IEEPA through various executive orders. The order specified unprecedentedly high tariff rates up to 145%. However, it is also important to note that these seemingly unfair high rates of tariffs were introduced well within the statutory requirements. But definitely a smart move since orders were followed by a national emergency, identifying threats sourced abroad, and implementing executive measures “to deal with” that threat, which arguably aligns with IEEPA’s procedural and textual requirements.

The ‘Liberation Day’ narrative acted as a catalyst to furiously invoke IEEPA, marking a symbolic action compared to other statutory routes that were available requiring statutory mandates restricting executive power. With a divided government and suspected opposition in the congress, IEEPA provided a bypass path to give effect to core campaign promises.

COURTS TRAJECTORY

The US Court of International Trade ruled against the execution of all tariff orders, collectively called the “Challenged Tariff Orders” on various grounds. The court observed that the US constitution empowers the congress to ‘lay and collect taxes, duties, imports and excises’ and to ‘regulate commerce with foreign nations’.  The use of IEEPA 1977 to impose ‘unlimited’ tariffs against so many countries by the president is beyond the executive power and that the IEEPA does not grant such authority. The court also reiterated the doctrine of non delegation referring to Gundy v Usa emphasizing that only such acts can be delegated which are laid down by the legislative act.

The ruling  based its reasoning on the emergence of major question doctrine establishing that executive power cannot overestimate its power on matters of ‘vast economic and political significance’ without clear authorization from the congress. An act like imposing worldwide tariffs over 57 countries triggers heightened scrutiny of statutory authorization.

The jurisprudence now has also moved towards stricter enforcement of ‘separation of powers’ given the express constitutional role of the congress in the concerned matter. The court took a varied approach from Nixon’s case, it carefully observed Nixon’s shock against Trump’s case laying down clear reasons for the contrasting judgement. The Tariff policy rolled out by Nixon highlighted the temporary nature of the imposition with clear provisions for termination; however, Trump’s action largely revolved around negotiating objectives. Further, the TWEA, 1917 had a wider scope of president’s authority than IEEPA, 1971’s intent to limit the emergency executive powers of the president by shifting the responsibility towards the congress as mentioned above. The court also highlighted that Nixon’s surcharge addressed a specific international monetary crisis with a clear resolution path; however, Trump’s tariffs addressed broader, more diffused challenges without specific end goals. Therefore, Nixon did not disregard congressional will by addressing an actual national emergency which is quite different from imposing whatever tariff rates deem desirable, not forgetting that Nixon’s surcharge was well within the expressed limit of HTSUS.

The court also observed invoking president’s authority under IEEPA requires imposition of national emergency only in instances of  ‘unusual and extraordinary threat”  and may not be exercised for any “other purpose” according to 1701(b). The action of imposing the tariffs so imposed is beyond the statutory scope of section 122 of the Trade Act of 1974 applicable to “fundamental international payments problem”, this provision addresses the issue of balance of payments, laying a tariff of maximum 15% for a duration of not more than 150 days.

The court also held that imposition of worldwide and retaliatory tariffs in response to an imbalance in trade which is a type of balance of payments deficit falls under emergency authorities in section 122 therefore could have been dealt with under section 122 instead of applying provisions of IEEPA.

CONCLUSION

The constitutional landscape has evolved from what it was in the 1970s. The journey of judicial interpretation from Nixon’s successful imposition of tariffs to Trump’s defeat is indeed a remarkable one representing a shift in the balance between executive emergency powers and authority of the Congress. The court over time rigorously transformed to actively construct constitutional boundaries through non delegation doctrine, major questions doctrine and doctrine of separation of power. The judgement reflects the change in judicial opinions with a shift in statutory reforms that were enacted by Congress to constrain the executive authority after recognizing TWEA’s unregulated delegation. The court highlighted that emergency powers cannot circumvent Congress’s exclusive constitutional authority unless enabled by the statute itself. This evolution demonstrates how constitutional jurisprudence has adapted to prevent abuse of emergency powers while preserving necessary executive authority for genuine national crises, ultimately reasserting congressional prerogative over trade policy and marking a watershed moment in the constitutional limits of presidential economic authority.​​​​​​​​​​​​​​​​

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Komalpreet Kaur is pursuing a BA LLB Hons. at Hidayatullah National Law University, Raipur, India.