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‘Congress shall have the power to lay and collect Taxes, Duties, Imposts, and Excises’

• June 4, 2025
• Ed Gresser

FACT: “Congress shall have the power to lay and collect Taxes, Duties, Imposts, and Excises.”

THE NUMBERS: Court of International Trade ruling in “V.O.S. Selections vs. Trump” –

WHAT THEY MEAN:

The Court of International Trade is busy, but usually with pretty specialized stuff. Its 66 opinions this year mostly cover things like application of antidumping penalties to steel products and countervailing duties to catfish, customs broker licensing, and airline ticketing fees. It’s rare for one to address something basic enough to elicit quotes from the Constitution on tax authority, and from the Federalist Papers on “the ‘separate and distinct exercise of the different powers of government’ that is ‘essential to the preservation of liberty.’” V.O.S. Selections v. Trump — the one that struck down the Trump administration’s two “International Emergency Economic Powers Act” tariff Executive Orders last Wednesday — is one of that kind. Background on it, and then a thought on the responsibility of Congress:

The case’s core issue is one we raised this past January, in our “Four Principles for Response to Tariffs and Economic Isolationism” post anticipating the Trump administration’s tariff binge. This is Congress’ Constitutional authority over tariffs and other taxes, and the systemic risk unlimited Presidential power to create tariffs would pose:

“The Constitution’s Article I, Section 8, gives Congress unambiguous authority over “Taxes, Duties, Imposts, and Excises,” and for good reason. No single individual, president or not, should have the power to create his or her own tax system out of nothing. That, at minimum, risks impulsive and ill-considered decisions. Even more seriously, it creates a standing temptation for all future presidents to use tariffs to reward personal friends and supporters, and likewise to punish critics, business rivals, and disaffected states.”

Our concern quickly became reality, as Mr. Trump attempted to use three elderly laws to bypass Congress and create a new tariff system by decree. V.O.S. Selections addresses one of these laws: the International Emergency Economic Powers Act — “IEEPA” for short — which dates to 1976. It doesn’t mention tariffs specifically, but gives presidents broad authority to act quickly in emergencies such as the outbreaks of wars or natural disasters.  (The other two laws, not covered in this case, are “Section 232” from 1962, allowing presidents to “adjust” imports to meet national security needs, and “Section 301,” 1974, authorizing threats or imposition of tariffs as a negotiating tool for administrations trying to reduce overseas trade barriers.) These laws share two unusual features: first, presidents don’t need Congressional approval to use them; and second, the policies they choose (tariff or otherwise) can stay on indefinitely. The temptation to rule by decree is thus latent in each, though no earlier president had wanted to try it.

The tariffs at issue in V.O.S. Selections come from two “IEEPA” decrees. The first, spanning three Executive Orders on February 1, declared an emergency over fentanyl and migration and used it to impose tariffs of 25% on Canadian and Mexican products, and 10% on Chinese-made goods.  The second, on April 2, claimed that the U.S. trade balance is a national emergency, and used it to create a “global” tariff of 10% and a battery of “reciprocal” tariffs ranging from 11% to 50% on 56 separate countries and the 27-member European Union.

In practical terms, the tariffs mean massive new costs for hundreds of millions of Americans and millions of businesses. The small New York wine seller whose name is on the case (V.O.S. Selections, on 8th Avenue), for example, buys wine from vintners in the United States and 13 other countries. The permanent “MFN” tariff system imposes a tariff of 6.3 cents per liter for its Argentine, Lebanese, French, Italian, Greek, Croatian, Hungarian, and Austrian wines, and no tariff on wine from FTA partners Morocco and Mexico. The IEEPA decrees hiked this to 10% for the Moroccan and Lebanese vintages, 25% for the Mexican, and threats of 20% and then 50% for the European varieties.

The question V.O.S. and the four other firms in the case — a women’s bicycle shop, a pipe-maker, a designer of educational electronics kits, and a fishing tackle store — pose (via advocates in the Liberty Justice Center) addresses the decrees’ foundation: can a president, by declaring an “emergency,” take Congress’ Constitutional power to set rates for “Taxes, Duties, Imposts, and Excises” for himself? The Court concluded that he can’t.

Its opinion in V.O.S. Selections v. Trump and the parallel State of Oregon v. Trump (filed by the Attorneys General for Oregon and 11 other states*), cites the Constitution for authority over tariffs, and Federalist Papers 48 and 51 for the breach in the ‘separation of powers’ an unlimited presidential tariff power would create. Their unanimous conclusion:

“The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 (“IEEPA”) delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country in the world. The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.”

The administration has appealed, and the Supreme Court will likely get the final word. But for now, the C.I.T. opinion tosses out all the IEEPA tariffs: the 10% global tariff, the threats of 50% tariffs on things from the European Union and Lesotho (and 46% on Vietnamese goods, 36% on Thai goods, 47% on Madagascar’s vanilla and clothing, 28% on Tunisian dates and jewelry, etc.), the 25% on Canadian and Mexican-made goods and the 10% on Chinese-made products.  The real-world impact of this is quite large: if upheld it will save American families and businesses — small firms like those in the case, farms, building contractors, retail shops, restaurants, hospitals, and manufacturers — hundreds of billions of dollars. The effect on American governance is greater: if the opinion stands, it will reaffirm Constitutional limits on unchecked and arbitrary presidential power, and bar presidents from nullifying Congressional tax authority through a law designed for quite different purposes.

Looking ahead: Assuming the C.I.T.’s opinion does stand, the IEEPA route for presidents hoping to bypass Congress and the Constitution will be closed. It isn’t the only such route, though, and the opinion leaves work for Congress and others hoping to avert further attempts to rule by decree.  It doesn’t affect, for example, the “Section 232” 25% tariff on cars and auto parts, nor the drastically oscillating “232” steel and aluminum tariffs (50%, at least this week), nor the “301” law used first to impose tariffs on Chinese goods in 2018 for negotiating purposes but more recently to convert them to long-term “industrial policy.” The 232 and 301 laws have more procedural checkpoints and requirements than IEEPA and take longer to use, but share a core weakness: since neither requires Congressional affirmation of any new tariffs, presidents can use them to create their own tariff systems.

Whatever one’s view of the merits of tariffs in trade policy or as taxation, this spring’s experience makes such a situation Constitutionally untenable.  Congress should not simply rely on courts to defend its authority.  It has the power to do so itself, and — as Trade Subcommittee Ranking Member Linda Sanchez along with House Ways and Means Democrats propose — should use it now.

* Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.