Leibowitz on Trade: How Effective the Tariffs?

First, U.S. Steel announced the idling of two blast furnaces, due to “softening” market conditions. Obviously, the Section 232 import restrictions were designed to increase U.S. production and reduce imports of steel, so this raises the question whether the trade restrictions are working as intended. Clearly, the U.S. Steel announcement was a setback for supporters of the tariffs; prices and shipments have declined in recent months, and the harm that the trade actions are causing to downstream industries in the United States has been well-documented. They have devasted many steel and aluminum traders, disrupted supply chains for U.S. manufacturers and caused no end of diplomatic and legal disputes with U.S. trading partners, including our most loyal and long-standing allies. The relevance of all this to “national security” has always been controversial, too.

Second, the Supreme Court decided a case last week that is tantalizing in its effect on the AIIS lawsuit challenging the constitutionality of Section 232 as an excessive delegation of legislative power by Congress to the President. The case, Gundy v. United States, has nothing to do with trade (it relates to nationwide registration of known sex offenders). However, the case was a challenge to the congressional delegation of legislative authority to the Executive Branch. Four Justices held that the legislative delegation met the court-developed standards for lawful delegation of authority, while three Justices held the opposite. One Justice noted that he would reconsider the court-developed standards and probably overturn them. The ninth Justice (Kavanaugh) did not participate in the case, because his confirmation came too late to participate in the Gundy case. However, Justice Kavanaugh has written extensively about the issue, and he is known to be skeptical about excessive delegation.

The scorecard of votes for and against reconsidering the law of delegation is tantalizing, as I noted above. Delegation of decision-making to the President has been a feature of the “administrative state” since the New Deal in the 1930s. The four “liberal” Justices are on record supporting the existing delegation tests, which almost always affirm the delegation. If the five conservative Justices (the Chief Justice, Thomas, Alito, Gorsuch and Kavanaugh) agree that the issue of delegation is ripe for consideration, they may vote to hear the appeal of the AIIS decision, which also raises the issue of delegation of legislative power. If they do, a 5-4 decision could result next spring and it could be interesting.

We still don’t know whether the Supreme Court will agree to hear the AIIS case. An announcement is expected this week about that, perhaps as early as tomorrow. That will be the subject next week’s note.

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