When President Donald Trump imposed his so-called reciprocal tariffs on pretty much all products from all countries this year, he said he was responding to a national emergency due to the nation’s trade deficit. He claimed as authority for his actions the International Emergency Economic Powers Act (IEEPA). The lower courts have ruled against the tariffs, finding that Congress had not delegated to the president sufficient authority to impose them. Their decisions are being appealed to the Supreme Court, with oral argument scheduled for November 5.
Only once before has a president imposed a blanket tariff as an emergency measure. President Richard Nixon declared a balance of payments emergency and imposed a 10 percent import surcharge in 1971. It was upheld by an appellate court in 1975 in the case of Yoshida International, Inc. v. United States. It is universally assumed, including by the lower courts in the current case, that Nixon used the Trading with the Enemy Act (TWEA)—the nearly identical predecessor authority to IEEPA—for the 1971 import surcharge.
However, this reading of history is wrong: Nixon did not claim emergency authority for the measure under TWEA. Nixon claimed authority to impose sanctions under trade agreement laws for the tariffs he put into place.
This difference could matter when the Supreme Court hears arguments on the appeal in November. Since Nixon did not invoke emergency powers under TWEA, a sanctions law, there is no legal precedent for Trump invoking emergency powers under IEEPA to impose his “reciprocal tariffs.”
Looking back at the events of 50 years ago, how did the courts get this important point so wrong? The answer takes some detective work. The planning for the surcharge took place in tight secrecy at Camp David, the presidential retreat in the Maryland woods, over a weekend in mid-August 1971. The administration’s top economic officials were all there, including Secretary of the Treasury John Connally, a trade hawk; Under Secretary for Monetary Affairs Paul Volcker; Federal Reserve Board Chair Arthur Burns; Chairman of the Council of Economic Advisers Paul McCracken; Council of Economic Advisers member Herb Stein; and Peter G. Peterson, serving as the assistant to the president for international economic affairs and executive director of the Council on International Economic Policy. Henry Kissinger, Nixon’s national security advisor, who was not at Camp David, was given such scant information early that weekend that it made little impression on him. Even Secretary of State William P. Rogers was kept in the dark, despite the massive impact the actions would have on US foreign relations. The State Department was not even informed until an hour before Nixon announced the measures on television on Sunday night, August 15, 1971.
Back at the main Treasury building next to the White House, security was also tight. The handful of people who worked on the package were told to report to work on Friday and to be prepared to stay for the entire weekend, telling no one, not even their spouses, where they were going to be. William Rehnquist, then an assistant attorney general, came over to the building at one point to approve the import surcharge proclamation. The document was not to leave the building until the president went on television to announce the package of measures.
Most of what happened at Camp David that weekend was chronicled by William Safire, Nixon’s speechwriter, in his memoir, Before the Fall: An Inside View of the Pre-Watergate White House, originally published in 1975. Safire was present during the deliberations in preparation for his drafting of the president’s televised address that Sunday. That narrative was given fresh currency by Jeffrey Garten in an excellent book published in 2021, Three Days at Camp David. Safire’s book provides a detailed account of the debate that took place on the legal basis for the president’s new tariff. Nixon adamantly refused to invoke TWEA. He rejected a proposal to do so on Friday, August 13, Safire wrote. Nixon didn’t like the connotation of the words, “trading with the enemy,” as applied to Japan. According to Safire, Nixon said, “No. That smacks wrong from the point of view of international leadership…. My long-range goal is not to erect a 10 per cent barrier around the U.S.—that would be retrogressive—but to set a procedure that lets us go up and down with room for negotiation. If we could move on the authority,” the President continued, “and at the same time close the gold window, we then provide the basis of negotiation.” Connally advised the president: “We ought to ‘suspend’ rather than repeal tax [trade] agreements, and we should say it is on a temporary basis, but we shouldn’t make a specific limit like six months.”
Peterson gave Nixon an alternative—using authority under international trade agreements. Under the General Agreement on Tariffs and Trade (GATT), the predecessor to the World Trade Organization, “all the United States had to do was declare a balance-of-payments emergency as a justification for impeding imports on a temporary basis. In that event, by agreement among the parties to GATT, other countries could not retaliate. Nixon thought that was a much better way to go, and [Federal Reserve chair Arthur] Burns agreed,” Garten wrote.
On Saturday, August 14, the president’s advisors tried again to get Nixon to use the wartime emergency authority. Nixon again refused. Garten states, “The import tax again took up a lot of time. Once, more, the president expressed his distaste for using the Trading with the Enemy act as the authority to raise import taxes….” He wasn’t even happy with justifying tariffs using the declaration of a balance of payments emergency, as would be permitted under GATT. The president brought the discussion to a conclusion, Safire writes. “… the President made some notes and summarized: ‘Let’s consider the decisions. The important thing we have already decided, and on the GATT basis. The border tax is not too damned aggressive, just aggressive enough….’ and enumerated the rest of his August 15 package.” Nixon could not have been clearer. Trade agreements authority, not the Trading with the Enemy Act, was to be used. Safire, not a trade lawyer, reflected the president’s determination on this point.
Nixon had just announced in July that he was planning his trip to China that would take place early in 1972. He very much would have wanted to keep the US-Japan relationship as stable and friendly as possible. Whether the participants at Camp David that weekend knew it or not, Nixon already had in mind inviting Japan’s emperor Hirohito to visit with him in the United States. Four days later, on August 19, Nixon announced the invitation. It was the first time in history that a serving Japanese emperor would set foot in the United States. Nixon flew to meet him in Anchorage a month later, on the emperor’s journey to Europe. There were strains in the US-Japan economic relationship at the time. The “Nixon shoku” (shock), as the surcharge was known in Japan, was dominating the news in Tokyo. The president’s surcharge proclamation issued on Sunday, August 15, 1971, included a declaration of national emergency, citing the balance of payments situation, and invoked his authority under trade agreement laws. He did not cite the sanctions authority Trading with the Enemy Act.
The administration was clearest in explaining its legal rationale for the surcharge to America’s trading partners. This is recorded in a GATT-restricted document issued at the organization’s headquarters in Geneva, Switzerland. GATT-restricted documents were not publicly available and were likely to have been used only by trade specialists within US executive agencies. Key is the US statement on September 7, 1971, defending the surcharge before the formal working party consisting of all 100 or so GATT members at that time. It cited US tariff laws, not TWEA. The US delegate to GATT made crystal clear that the United States lacked the legal authority to exceed any rate the Congress had provided by statute, “because of the requirements of US tariff laws.” That only made sense if the surcharge was based on trade agreement laws. Sanctions law (TWEA) posed no such limits on the measures imposed in an emergency. Furthermore, the United States claimed that the surcharge was justified under GATT Article XII, the balance of payments authority, not Article XXI, the essential security authority. The latter provision allows a party to take “any action which it considers necessary for the protection of its essential security interest… (iii) taken in time of war or other emergency in international relations.” If wartime national security authority had been invoked, the United States could have justified it to America’s trading partners as being under the GATT security exception.
The surcharge lasted only four months, until the Smithsonian Agreement on December 18, 1971, which closed the gold window and paved the way for the devaluation of the dollar. Yoshida International, Inc., an importer, sued to recover the money it had paid under the measure.
The government attorneys defending Nixon’s position in the Yoshida case said the president could suspend prior proclamations lowering tariffs to put the additional 10 percent levy in place. The courts deciding Yoshida in 1975 did not find that trade agreements authority allowed the president to suspend trade agreements in order to raise tariff levels. The Customs Court decided that the president had no authority at all to impose the surcharge. That decision was reversed on appeal, with the appellate court deciding that sanctions authority, the Trading with the Enemy Act, authorized the surcharge under emergency authority to “regulate trade.”
The government had given a post hoc rationalization of the authority for the Nixon surcharge, citing the TWEA, and commentators ever since have accepted that assertion. What is the evidence for this version of events? There is no mention of TWEA in any of the documents released at the time of the 1971 proclamation. What the president did is consistent with his seeking to use only his authority to terminate temporarily (suspend) prior tariff proclamations and is inconsistent with use of the 1917 wartime statute. This is because the president did not raise any tariff above the level previously set by Congress by statute, prior to any trade negotiations. If the authority was TWEA, there was no reason to be fastidious about prior rates previously set by an act of Congress. The emergency would have justified waving them aside.
It has been an article of faith in the courts and in US trade law history and literature that there is a legal precedent of a president invoking a trade sanctions statute to impose an additional tariff blanketing nearly all imports. The Court of Customs and Patent Appeals (CCPA) upheld Nixon’s surcharge, incorrectly assuming that he had used TWEA. But it has been considered settled law. The Federal Circuit Court of Appeals mentioned Yoshida 82 times in its opinion ruling against the use of IEEPA. That court notes that after Yoshida was decided, balance of payments authority was granted to the president in 1974, and it would have to be used for any future surcharge imposed after January 3, 1975. It is also true that IEEPA was enacted in 1977 with the supposition that the use of TWEA was upheld in Yoshida to support imposition of a blanket tariff.
What will the Supreme Court make of the fact that Nixon did not invoke his presidential emergency powers to impose the surcharge? There is no definitive answer. The evidence is clear that Nixon did not invoke the Trading with the Enemy Act. Congress re-enacted the sanctions authority in 1977 in the International Emergency Economic Powers Act, during the time when there was a widespread belief that the authority had already been used by Nixon just a few years earlier to impose across-the-board tariffs.
The fact remains the Trump universal tariffs are a legally unprecedented use of authority from the Congress.
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