Incantations of National Emergency: The U.S. Court of International Trade Provides Crucial Historical Context

This is a free piece of Notes on the Crises. I will not be paywalling any coverage of this crisis for as long as it persists, so please take out a paid subscription to facilitate performing that public service. You can also leave a “tip” if you want to support my work but hate emails cluttering your inbox or recurring payments. If you’re rich, take out the Trump-Musk Treasury Payments Crisis of 2025 Platinum Tier subscription. 

Note to Readers: Notes on the Crises is on bluesky, an alternative to twitter. Notes on the Crises is also on Instagram and Youtube, where I have been posting interviews others have done with me and will soon be posting Notes on the Crises original content.

Finally, I'm known as a crypto skeptic, and I am, but that doesn't mean I won't accept people giving away bitcoin to me. Here's my address: bc1qegxarzsfga9ycesfa7wm77sqmuqqv7083c6ss6

Wednesday last week the U.S. Court of International Trade took the country by surprise with a sudden decision knocking down Trump’s tariffs. Many readers have likely never heard of this institution, which is understandable. Its usual case load is obscure, well, trade issues. Before we get into the specifics of the court decision in a future piece, I want to provide extended background on the court’s history and the concurrent legislative history of executive discretion over tariffs. “Executive discretion over tariffs” is just a fancy way of talking about the president being able to change tariff rates without new legislation by congress. I’m especially interested in this since the problems at the Bureau of the Fiscal Service and the Automated Clearing House system have made me more interested in how the Federal Judiciary might, or might not, respond to what we can call “payments system-based attacks” on the Judicial system.

Anyway,  some form of federal trade court has existed since 1890. That year an act of congress created the “Board of General Appraisers”, an administrative court housed in the Treasury. What that means is that legal disputes were handled by a part of the executive branch rather than a part of the judicial branch and you didn’t have the right to go to a conventional court if you lost your case. In 1926 the Board of General Appraisers was renamed the “U.S. Customs court”, but it remained substantively the same (outside of being moved out of the Treasury and into the department of Justice in 1930). 

The U.S. Customs Court only took a familiar shape (well familiar to the nerds interested in this stuff) in 1948 when it was moved out of the executive branch. At the time, its decisions could be appealed to a specialty appeals court straightforwardly named the “Court of Customs and Patent Appeals”. In 1956 it was officially made a fully fledged part of the Federal Judiciary, which involves lifetime appointments and protection against salary reductions. Finally, the Customs Court was renamed to the U.S. Court of International Trade, in legislation which elevated its position and expanded its jurisdiction. Notably, the chief judge of this court is a member of the “Judicial Conference of the United States”. This obscure body governs the Federal Judiciary itself and will become increasingly important as the attacks by the Trump administration on the Federal Judiciary escalate- especially at the payments level.

What led to this increasing shift from 1890 to today? Simply put, international trade issues became more important and more complex. Consistent and clear decisions were seen as key to ongoing trade relations with other countries, and the judicial review of international trade disputes was reshaped- and strengthened- to accommodate this. In some sense then, the legal design of international trade from statutes to the organization of the judiciary itself was created in diametric opposition to the freewheeling erratic nature of the Trump administration’s decisions. So it's no surprise that they have come into fundamental conflict. 

To recap then, the U.S. has had a specialized “court” for trade issues for the past 135 years, and that court has been part of the Judicial branch for nearly 70 years. While obscure, this court has been important for quite some time. The extent to which its decisions have not made waves is essentially determined by the lack of dramatic actions by presidents over trade during the past 45 years. Which brings me to the executive branches’ “tariff powers”. 

Before we do so, let's take a moment to step back and examine the big picture. Since January 31st, I’ve been intensely focused on impoundment- the constitutional term for cutting government spending without congressional direction. Given the way modern budgetary legislation is written, this is generally unconstitutional. The idea of unconstitutionally raising taxes is usually so unthinkable that in discussions where that is theoretically a possibility, it is generally set aside. I did that myself in my January 31st piece. Yet, as numerous commentators and Democratic politicians have reminded us, Tariffs are a tax. So when Trump- or any president- changes Tariff rates they are engaging in discretionary control over taxes. What this court case is about is the extent to which Trump has unconstitutionally exceeded his congressionally granted discretion over taxation- specifically tariffs. 

Logically enough then, the court case starts with a ten page summary of the evolution of the presidential tariff authority. This section is clear and extremely useful- so useful in fact I would recommend assigning it in undergraduate classes. Before getting to the legislative and judicial history of these powers, the overview from the court does a good job of establishing the central constitutional issues at stake. One branch of government can’t wholesale transfer its powers to another. 

This is known as the “nondelegation” doctrine and to hammer the point home, the court quotes James Madison in the Federalist papers. Thus there needs to be an “intelligible principle” guiding delegation. As the decision itself says:

Thus, courts have consistently upheld statutory delegations as long as Congress “lay[s] down by legislative act an intelligible principle to which the person or body authorized to [exercise that authority] is directed to conform.” Mistretta v. United States, 488 U.S. 361, 372 (1989) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928))

This is, predictably, what the rest of the court’s analysis centers on.

Which brings us the legislative and judicial history of the executive branch’s tariff powers. It shouldn’t be surprising that executive discretion over tariffs really began during World War one. At the time Congress passed the “Trading with the Enemy Act of 1917”. In one sense, these powers were very sweeping. In another sense,  the powers associated with TWEA were limited because it could only be used during “wars”. Meanwhile, the legal definition of a “war” was not as… flexible as it is today. The Pandora's box that led to our current moment was opened during the Great Depression. The Emergency Banking Relief Act of 1933 amended the TWEA to add “or during any other period of national emergency declared by the President”.  This is key because this amendment explicitly connected discretion over tariffs to “national emergencies”- a point we will return to. This power remains essentially unchanged for decades afterwards.

What breaks this continuous pattern of extremely expansive presidential tariff powers was the collapse of Bretton Woods- the international system for regulating exchange rates which governed the international economic system after World War Two. This, among other things, ushered in a wave of legislation to respond to the then-unfamiliar phenomena of exchange rate volatility and balance of payments uncertainties. The 1975 Committee on Foreign Investments in the United States I wrote about a few weeks ago was one such product of that legislative wave. The other factor outside of Bretton Woods was, of course, Nixon himself. For one thing, Nixon’s shock end of convertibility of the dollar into gold (for foreign countries) was accompanied by wage & price controls and a 10% tariff on imports. Long time readers will remember my deep interest in this period a few years back and, in particular, the interview I did with Daniel Mitchell, chief economist for the “Pay Board” the body responsible for Nixon’s wage controls.

Nixon’s role was not just his actions ending the “gold standard”- his other role was his various executive overreaches and illegal behavior . The mood in the 1970s, in the aftermath of Watergate, was towards restricting executive power. This played out in the arena of impoundment, culminating in the Impoundment Control Act of 1974, as I wrote about all the way back in “Day 0” of the Trump Musk Payments Crisis. This mood played out in the arena of Tariffs as well. Congress took two key actions in 1977. The first was returning the Trading With the Enemy Act to its original role- war. They simply struck out the amended language that was added during the Great Depression.

If things had played out somewhat differently, we could end the story here. Instead, while congress was skeptical of the executive branch at that time, the 1970s economic situation convinced them there were peace-time “economic emergencies” that required some kind of executive discretion. Enter the International Emergency Economic Powers Act of 1977 (“IEEPA”). This act used a lot of the same language that the Trading With the Enemy Act used, but includes a lot more procedural limitations. One crucial limitation is over the meaning of “national emergency” itself.

As part of this legislative wave restricting executive power was the “National Emergencies Act of 1976”. This put a number of statutory restrictions on presidential declarations of “national emergencies” and subjected these declarations to both greater fact finding, including by the judicial branch, and oversight by both congress and the courts. One of the key restrictions is that the “emergency” actions must actually be aimed at combating the emergency. A direct causal link between an action and a goal is indeed a tough bar for the Trump administration to clear. It also requires the president to report to congress about the national emergency every six months. The original legislation had a number of other constraints which courts have eroded over time- a topic for next week. 

Thus, to understand Trump’s Tariff moves since the beginning of his presidency… 19 weeks ago (my god does it feel so much longer!) we need to examine his administration’s bizarre approach to the national emergency hurdles these statutes built. In the meantime, the words of a 1975 decision by the United States Court of Customs and Patent Appeals known as United States v. Yoshida provide an excellent- and prescient- preview:

The mere incantation of "national emergency" cannot, of course, sound the death-knell of the Constitution. Nor can it repeal prior statutes or enlarge the delegation in § 5(b). The declaration of a national emergency is not a talisman enabling the President to rewrite the tariff schedules, as it was not in this case. [emphasis added]