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Why does the executive branch have so much power over tariffs?

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In recent years, Presidents Trump and Biden have exercised an aggressive level of executive authority to raise tariffs on imported goods. Most of these tariffs have been implemented under broad authority delegated by Congress to combat unfair practices or national security. As a result, tariff revenue as a share of total tax receipts peaked in 2019 over the last eighty years, surpassing levels not seen since the mid-1970s (Figure 1). President-elect Trump has proposed to push this authority even further by imposing broad-based tariffs on all imported goods, 25% tariffs on goods from Mexico and Canada, and even higher tariffs on Chinese goods.

Economists have a dim view of unilateral tariffs. Tariffs raise prices for domestic consumers, they distort markets by shifting production and economic activity towards sectors where production is more expensive and resource intensive, and they can—and do—lead to retaliation and trade wars. For much the same reasons, economists are also skeptical of tariffs as an international policy tool because they tend to hurt domestic consumers more than the foreign producers they are supposed to punish.

Our beef here is not with tariffs per se, however, but with the process for implementing tariffs. Tariffs are unusual because they are a tax that is not implemented by congressional legislation; instead, they are imposed by executive branch regulation. However, unlike other executive branch regulations, they escape many of the usual administrative procedures and judicial reviews that discipline the regulatory process. This results in few, if any, checks and balances, allowing tariffs to be implemented without reasoned analysis or substantive justification, and leaving those harmed by tariffs without recourse to administrative or judicial remedies. In what follows, we describe how and why tariff-setting policy is different from other tax and economic policymaking and suggest options to improve policy making. 

How did tariffs fall under the purview of the executive branch?

The constitutional authority to levy taxes, including customs duties (tariffs), indisputably rests with Congress under Article 1, Section 8 of the U.S. Constitution. This authority is fundamental to the government’s ability to fund its operations, including national defense, public services, and infrastructure spending. Specifically, tax legislation must originate in the House of Representatives through the House Ways and Means Committee. The Senate Finance Committee can review, amend, and even substitute new tax legislation after it passes the House. Together, both committees shape tax policy. 

Until the early 1930s, tariffs, like all other tax rates, were determined by Congress. The enactment of the Trade Act of 1930, otherwise known as the Smoot-Hawley Act, exposed some of the risks of imposing large tariffs to protect American workers. President Hoover campaigned on a promise to raise prices on agricultural imports, and he followed through with this promise by signing into law the Smoot-Hawley Act, which imposed the second-highest tariffs in American history, targeting agricultural imports to protect American farmers. The act triggered a global trade war—by 1933, U.S. exports had fallen by at least 60%—and deepened the on-going macroeconomic crisis. This would also be the last act implemented by Congress to set tariff rates.

On the heels of this disaster, Congress began a decades-long trend of ceding the authority to lay and collect customs duties to the executive branch. This evolution began with the passage of the Reciprocal Trade Agreements Act of 1934 (RTAA). The RTAA authorized the president to negotiate bilateral, reciprocal trade agreements and to proclaim limited adjustments to tariff rates without congressional action. The Trade Expansion Act of 1962 broadened this authority to include multilateral trade negotiations, reflecting the U.S.’s role in global trade. Importantly here, Section 232 of the Trade Expansion Act granted authority to the president to impose tariffs or other trade restrictions if imports were found to threaten national security. 

The Trade Act of 1974 granted the president new authority to negotiate trade agreements and adjust tariffs, while also creating mechanisms to protect U.S. industries and workers. For example, Section 201 provides a mechanism for the U.S. to protect domestic industries from serious injury caused by import surges, and Section 301 grants authority to the U.S. Trade Representative (a cabinet-level position that leads an executive branch agency that is responsible for developing U.S. foreign trade policy) to take action against foreign countries that violate trade agreements or engage in practices that are deemed unfair and negatively affect U.S. commerce. 

The last six years have been characterized by an escalation of trade war policies that were introduced by President Trump and largely retained by President Biden. These measures reflect a slow but steady growth in the president’s capacity to proclaim duties, underscoring the evolving balance between congressional oversight and executive power in the realm of trade. For example, the Trump administration imposed tariffs on steel and aluminum under Section 232 authority after the Department of Commerce conducted an investigation that concluded that U.S. reliance on foreign steel and aluminum posed a threat to national security. The Biden administration replaced these tariffs with a tariff-quota that permits a certain level of imports, after which tariffs will be imposed. The Trump administration also introduced tariffs on goods from China under Section 301 authority, citing unfair trade practices. The Biden administration conducted a required statutory review of the Section 301 tariffs and decided, in large part, to retain them. Finally, the Trump administration imposed tariffs on washing machines and solar panels under Section 201 authority, citing the need to protect U.S. domestic industries from serious injury caused by an import surge. The tariff on washing machines expired in 2023; the Biden administration extended the solar panel tariff.

Alongside trade acts, Congress grants authority to the executive branch to address “unusual and extraordinary” peacetime threats to national security, foreign policy, or the economy under the International Emergency Economic Powers Act (IEEPA) of 1977. The IEEPA was enacted along with restrictions on Trading with the Enemy Act of 1917 (TWEA) to limit TWEA’s use to wartime emergencies. Notably, President Nixon imposed a temporary 10% tariff on all imports in 1971 under TWEA authority to address U.S. trade deficit and currency issues. President Trump announced his intention to similarly invoke the IEEPA to impose escalating tariffs on Mexican imports in May 2019 as a way to address immigration concerns, but he rescinded this threat after Mexico agreed to take certain actions to curb immigration.  

How are tariffs different from other policies originating in the executive branch, like regulations or executive orders?

Unlike legislation passed by Congress, regulations are federal laws that originate from the executive branch. The executive branch’s authority to implement laws through regulations is delegated by Congress, similar to the authority to set tariff rates. Unlike tariffs, however, the development and implementation of regulations are typically governed by a series of acts designed to ensure transparency, accountability, and fairness in the regulatory process. 

To begin, the Administrative Procedures Act (APA) establishes essential safeguards that govern how the executive branch may create regulations. For example, the APA requires federal agencies to follow specific procedures when making rules, including public notice of proposed regulations and an opportunity for interested parties to submit comments, which regulators are required to address and respond to. This notice-and-comment period thus allows the regulated community and other stakeholders to influence rulemaking decisions. The APA also sets standards for judicial review, enabling courts to assess whether regulations are arbitrary, capricious, or exceed statutory authority. Additionally, the APA mandates that agency actions be based on a sound legal and factual basis, providing protections to those affected by the regulations and limiting executive discretion.

In addition, the Paperwork Reduction Act (PRA), Regulatory Flexibility Act (RFA), and Congressional Review Act (CRA) provide critical checks on executive rulemaking authority by ensuring transparency, accountability, and minimizing burdens. The PRA limits the imposition of unnecessary paperwork and requires agencies to justify information collection to the Office of Management and Budget (OMB). The RFA mandates agencies to assess the impact of regulations on small businesses and consider less burdensome alternatives. The CRA allows Congress to review and potentially overturn new regulations, ensuring legislative oversight on executive rulemaking. Together, these laws balance regulatory power and protect affected stakeholders.

Finally, Executive Order 12866, issued in 1993 and maintained by every president since then, establishes key principles that constrain and guide executive branch agencies when creating regulations. The order limits the circumstances in which agencies can implement regulations to (1) when a new law passed by Congress requires it; (2) when it is necessary to interpret a law passed by Congress; or (3) when a compelling public need makes issuing a regulation by the executive branch necessary, which occurs when problems can’t be solved by the market. For example, when markets fail to “protect or improve the health and safety of the public, the environment, or the well-being of the American people,” the executive branch can use delegated regulatory authority to address that failure. 

EO 12866 requires agencies to assess the costs and benefits of significant regulatory actions under the guidelines set forth by Circular A-4. The order also mandates that agencies consider alternatives to regulation and choose the least burdensome option that achieves policy goals. Additionally, it subjects significant regulations to review by the Office of Management and Budget (OMB), providing an additional layer of oversight. This procedure ensures that regulations are economically justified and that the benefits of regulations outweigh the costs. By prioritizing efficiency, transparency, and accountability, EO 12866 ensures that regulations are thoughtfully designed, minimizing unnecessary burdens on the economy while promoting effective policy outcomes.

Within this framework of Acts and EOs, regulations that are arbitrary or capricious—for instance, which ignore evidence and research contravening their purported effects and benefits—can be challenged in court. This “arbitrary and capricious” standard is frequently viewed as requiring an agency to demonstrate that it engaged in reasoned decision making. In a 2016 report, the Congressional Research Service (CRS) identified several agency regulatory actions that the courts found to be “arbitrary and capricious” for reasons including:

  • “contradicting the ‘expert record evidence’ without explanation
  • fail[ing] to provide any coherent explanation for its decision
  • failing to consider a relevant and important factor in making a decision
  • issuing a rule that was based on ‘pure political compromise, not reasoned scientific endeavor’
  • failing to ‘exercise sufficiently independent judgment’ by deferring to private parties.”

In short, not only do procedural rules provide substantial guardrails for executive branch authority, but they are enforced by the judiciary. 

What are the checks and balances on the imposition of tariffs?

In contrast, executive branch tariffs are statutorily excluded from most checks and balances. This is because tariffs are typically governed by specific trade statutes under which they are imposed rather than the broader framework of administrative law. For example, while most regulations require agencies to follow the Administrative Procedure Act (APA), tariff changes occur under direct statutory or presidential authority, bypassing APA requirements like judicial reviews. Furthermore, tariffs may be exempt from the Paperwork Reduction Act (PRA) and the Regulatory Flexibility Act (RFA) because they are not traditional regulatory measures that involve significant paperwork or small business impacts. 

In addition, tariffs are generally not subject to review by the Office of Information and Regulatory Affairs under Executive Order 12866. Tariffs fall outside the scope of EO 12866 because they are considered instruments of trade policy granted by the executive branch’s foreign economic policy powers rather than domestic regulatory measures, which fall under the purview of EO 12866.

Likewise, most tariffs are generally not subject to the Congressional Review Act (CRA), which means that Congress does not have the ability to overturn tariffs. For example, Section 301 tariffs are implemented by the United States Trade Representative following investigations into unfair trade practices by foreign countries under the authority of the Trade Act of 1974. Since Section 301 tariffs are considered foreign trade actions rather than typical domestic regulations, they do not fall under the CRA’s review process. Instead of Congressional oversight, challenges must arise through political processes, diplomacy, or legal disputes in trade courts.

Not only does the imposition of tariffs operate outside of standard checks on executive authority, but few safeguards exist within the trade acts themselves (See Packard and Lincicome, 2024). For example, Section 232 of the Trade Expansion Act of 1962 authorizes the Commerce Department of Industry and Security to initiate investigations into whether certain imports threaten national security and, if so, the Act grants expansive authority to the president to restrict those imports with little substantive or procedural checks on this authority. Likewise, Section 301 of the Trade Act of 1974 authorizes the U.S. Trade Representative (USTR) to investigate and remedy “unfair” foreign trade practices, including through the use of country-specific tariffs. Although Section 301 requires that the USTR request what may be perfunctory consultations with the foreign country accused of unfair trade practices, the duration of the remedy is open-ended.

Importantly, neither legislation, executive order, or judicial precedent describes whether or how imported goods threaten national security nor whether a foreign trade practice is “unfair.” Moreover, even in circumstances that have an economic basis—for example, the “unfair” trade practices in Section 301 or the need to protect domestic industries under Section 201—there is no process for assessing the economic effects or net benefits of a proposed tariff remedy (let alone the magnitude of the tariff). As a result, the tariff-implementing process allows the executive branch to ignore any costs of tariffs and thus to implement tariffs that make Americans worse off. 

Finally, institutional checks on the executive authority to impose tariffs have, thus far, been ineffective. For example, although several members of Congress have, from time to time, proposed legislation to require congressional review and approval of tariff action (see, for example, the Bicameral Congressional Trade Authority Act, the Global Trade Accountability Act, or the No Taxation Without Representation Act of 2024), these proposals have never received a floor vote. This lack of progress is consistent with the political reality that any such effort would require overwhelming bipartisan support, as the sitting president has the authority to veto any such legislation. The courts, on the other hand, can provide a check on unilateral tariff action. Recent challenges raised by importers against the Section 232 and 301 tariffs imposed under President Trump and retained under President Biden, however, have been vigorously defended by the executive branch and upheld by the courts.

Weighing the benefits and costs of executive branch authority to impose tariffs 

The delegation of tariff-setting authority from Congress to the executive branch has been a gradual but significant shift in U.S. trade policy, raising important questions about the balance of power and broader economic implications. 

On the one hand, allowing the president to unilaterally set tariffs offers flexibility, speed, and the ability to respond swiftly to economic or national security threats. The agility of executive authority is particularly valuable in light of the current polarization in Congress, which has slowed down the legislative process, even for routine matters. In certain cases, the quick implementation of tariffs is crucial for safeguarding critical domestic industries from sudden surges in imports or unfair competition, helping to protect jobs and national security interests in a timely manner. Moreover, connecting the authority to impose tariffs to the executive branch’s constitutional power to conduct foreign affairs and statesmanship enhances the administration’s capacity to negotiate trade deals that are of increasing importance in the interconnected global economy. 

On the other hand, this authority can result in unilateral actions that bypass broader legislative oversight and popular support, potentially resulting in economic disruptions, retaliatory trade wars, and strained international relationships. The lack of transparency surrounding tariff impositions raises concerns about accountability, as there is often minimal requirement for public input or justification, leading to a perception of arbitrary decision making that may not be justified by cost-benefit analysis. This increased risk can create significant economic uncertainty, unsettling markets and disrupting established supply chains. Moreover, such expansive executive authority raises constitutional concerns, potentially infringing upon the separation of powers designed to ensure a system of checks and balances, thus eroding the legislative role in shaping trade policy and heightening tensions between branches of government.

What are the potential reforms to tariff policymaking?

Both Congress and the executive branch face a range of options to reform tariff policymaking and to install checks and balances. 

Legislative options

First and foremost, Congress could revoke most or all of the authority it has delegated to the president. For example, legislation recently proposed by Rand Paul would require the president to submit to Congress a proposal to implement each tariff, including the rationale. The proposed tariff would only go into effect if approved by a joint resolution in Congress. In short, this legislation would return to Congress the power to approve new import duties. Likewise, Congress could repeal specific tariff authority—like Sections 201 and 301—or require tariffs proposed under such authorities to be voted on in Congress. 

Stopping short of directly revoking executive authority, legislative changes could tighten the criteria for imposing tariffs. For instance, Congress could introduce sunset provisions requiring regular re-evaluation of tariff measures after a set time. Mandatory reporting could be implemented, compelling the executive branch to justify tariff actions with detailed reports to Congress or even requiring these reports to undertake a full cost-benefit analysis following EO 12866. Additionally, Congress could establish a process for a joint resolution of disapproval, enabling Congress to rescind tariffs through expedited legislative procedures.

Finally, legislative changes could strengthen the judicial oversight of tariff decisions. This would provide an additional safeguard to ensure that trade policies are both lawful and grounded in reasoned decision making. For example, reforms could clarify statutory language to eliminate any exemptions currently shielding tariff actions from judicial review. These changes would empower courts to scrutinize the legality and rationality of such measures. Furthermore, establishing explicit standards for judicial review—outlining criteria that must be met and the evidence required to justify specific tariffs—would help ensure that the decisions are coherent, well-documented, and consistent with broader statutory mandates. By enhancing judicial review mechanisms, policymakers would create a more balanced system of checks and balances, ultimately reinforcing the legitimacy and accountability of tariff-setting processes.

Beyond limiting executive authority directly, Congress could enact legislation that enhances the administrative procedures and establishes clear guardrails for implementing tariffs, extending existing rulemaking protocols, such as those outlined in the Administrative Procedure Act, to tariff actions. Under this framework, agencies would be required to issue notices, solicit public input, and incorporate robust transparency measures—such as publishing detailed economic and regulatory analyses—prior to finalizing any tariff decision. These reforms could, likewise, mandate rigorous cost-benefit evaluations consistent with standards set by Executive Order 12866, ensuring that tariffs undergo the same level of scrutiny as other significant regulatory actions. In addition, Congress could make tariff decisions subject to review by the Office of Information and Regulatory Affairs and foster interagency coordination to ensure that tariff policies complement broader economic objectives. Taken together, these legislative steps would not only promote well-informed decision making but also increase accountability, predictability, and alignment with long-term national interests.

Executive branch options

In addition to legislative reforms, the president could issue new executive orders designed to strengthen the procedural integrity and transparency of tariff implementation. Such executive orders could mandate that agencies follow stricter review protocols—mirroring the requirements of thorough economic and regulatory analyses—to ensure that tariff decisions are well-grounded and publicly justified. They could further require meaningful public engagement, such as soliciting feedback and responding to stakeholder concerns before tariffs take effect. By shaping the executive branch’s internal procedures and expectations, these orders would not only complement congressional efforts to enhance accountability and coherence in trade policy, but they would also help instill greater public trust and confidence in the decision making process. However, addressing the problem through executive order should be seen as a temporary solution, as future administrations would have the authority to revoke such orders as they see fit.

Implementing the proposed reforms would yield a range of important benefits. First, they would improve decision making by fostering data-driven, analytically sound policies that rely on empirical evidence rather than ad hoc judgments. Involving a broader set of stakeholders—from industry groups to consumer advocates—would help ensure that decisions reflect a diverse array of perspectives, leading to more balanced and durable outcomes. Furthermore, strengthened checks and balances would reinforce accountability, as both Congress and the judiciary would have enhanced oversight capabilities. This institutional recalibration would also better align trade policymaking with constitutional principles, ensuring that tariff decisions respect the separation of powers and properly reflect the legislative branch’s authority over trade policy.

  • Footnotes
    1. Courts’ interpretations of the APA, including the Chevron deference doctrine—where courts defer to reasonable agency interpretations of ambiguous statutes—highlight its role in balancing agency expertise and judicial oversight. However, recent cases such as Loper Bright Enterprises v. Raimondo challenge the extent of this deference, potentially reshaping the judiciary’s role in APA-related review.

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