Who Gets The Final Say On Solar Tariffs: Congress Or The President?

Introduction

On June 6, 2022, President Biden used the emergency powers granted to him under the Tariff Act of 1930[1] and signed an executive order temporarily lifting import duties collected on solar cells and modules[2] from Cambodia, Thailand, Vietnam, and Malaysia.[3] President Biden sought to ease supply blockages, increase domestic production, and cement the administration’s commitment to furthering clean energy initiatives.[4]. The order was designed, as emphasized by Secretary of Commerce Gina Raimondo, to “ensure[ ] America’s families have access to reliable and clean electricity while also ensuring we have the ability to hold our trading partners accountable to their commitments.”[5]

However, on April 20, 2023, the U.S. House Ways and Means Committee voted[6] to end President Biden’s tariff moratorium program.[7] The Committee reasoned that companies could abuse the moratorium and circumvent critical antidumping and countervailing duties used to protect American manufacturers.[8] Nevertheless, on April 24, 2023, the White House double-downed on the emergency measures and asserted President Biden’s intention to veto any congressional resolution reintroducing tariffs on the solar cells and modules.[9]

This dispute between the Biden administration and Congress over the moratorium strikes at the core constitutional separation of powers.[10] So, between the legislative and executive branches, who really gets the final say on tariffs levied on goods imported into the U.S.?

Congressional Power

Article I, Section 8, Clauses 1 and 3 of the Constitution grants Congress the power to “regulate commerce with foreign nations,” including the power to impose tariffs on goods imported into the U.S. Additionally, Congress has the authority to enact any legislation necessary to formulate trade policy domestically.[11] From a historical perspective, the establishment of tariffs on imported products functioned more as a “domestic tax policy rather than foreign affairs,” thus falling within Congress’s constitutionally enumerated taxation powers.[12] Accordingly, Congress serves as the central authority over U.S. trade policy by setting trade negotiating goals, ratifying trade laws and agreements, and “overseeing executive trade functions conducted by a range of federal agencies.”[13]

However, Congress has, on a limited and temporary basis, delegated legislative powers to the President by granting the Executive “power to set tariffs and ... regulate commerce with foreign nations.”[14] Historically, the passage of several acts[15] represented congressional efforts to grant the President authority to conclude international trade negotiations and ensure that the domestic tariff structure adequately protects the American economy.

In conjunction with these acts, Congress has also enacted trade promotion authority (“TPA”) legislation.[16] TPA functions as a legislative procedure which empowers the President to negotiate trade agreements while ensuring Congress holds onto the reins for developing and overseeing U.S. trade policy.[17] Essentially, TPA streamlines the congressional approval process for trade agreements by putting an agreement up for a yes-or-no vote, limiting debate, and preventing amendments to sideline or bury the deal under lobbyist or interparty political pressure. See Figure 1 for a breakdown of TPA timeline.[18]

Despite allegations that TPA may promote “undemocratic” principles and violate the power divide explicit in the Constitution, the Supreme Court has held “separation-of-powers principle, and the nondelegation doctrine in particular, do not prevent Congress from obtaining the assistance of its coordinate Branches.”[19] TPA legislation “reaffirms Congress’s overall constitutional role in…U.S. trade policy” in three ways:

(1)  TPA outlines Congressional guidance to the President on trade policy priorities and negotiating objectives.

(2)  TPA establishes Congressional requirements for the Administration to notify and consult with Congress, with the private sector and other stakeholders and with the public during the negotiations of trade agreements.

(3)  TPA defines the terms, conditions and procedures under which Congress allows the Administration to enter into trade agreements, and sets the procedures for Congressional consideration of bills to implement the agreements.[20]

Due to the inherent revenue implications of domestic trade policy and tariff regimes, the House Ways and Means Committee and Senate Finance Committee carry out their trade policy oversight responsibilities and “assess [trade policy and tariff regimes’] conformity to U.S. law and congressional intent.”[21] And in this case, the House Ways and Means Committee determined that President Biden’s tariff moratorium contravened congressional intent by “allow[ing] more unfair solar imports from China into the United States.”[22] Thus, the House Ways and Means Committee acted within its congressional authority when it voted to repeal President Biden’s tariff moratorium.

Presidential Power

As the Commander and Chief, the Constitution grants the President power to negotiate international agreements (and conclude them, though, only with the approval of a supermajority in the Senate),[23] issue executive directives,[24] and veto unfavorable legislation.[25]

Because tariffs have gradually turned into tools used to further U.S. international trade and foreign policy, Congress has authorized the President to adjust the domestic tariff structure on a limited and temporary scope when necessary, under TPA.[26]

Additionally, the President has statutorily been granted the power to impose emergency trade policy measures to protect the American economy under certain circumstances using executive orders and proclamations. For instance, Sections 201 and 301 of the Trade Act of 1974 empower the President to temporarily limit imports that could “cause or threaten serious injury to domestic industry” so as to “facilitate ‘positive adjustment’ of a domestic industry to import competition” or combat unfair trade practices accordingly.[27] Similarly, Section 232 of the Trade Expansion Act of 1962,[28] also provides the President with the power to levy tariffs or impose other trade measures if the importation of certain merchandise poses a national security threat.[29]

President Biden’s current invocation of statutorily granted legislative authority arose out of Section 318(a) of the Tariff Act of 1930.[30] Under this emergency authority, the President may declare “the importation free of duty” of any merchandise required to alleviate the emergency at hand.[31] In this case, President Biden defined “an emergency to exist with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand.”[32]

Lastly, the presidential veto allows the President to have the final say in trade policy legislation for tariffs not already in the Executive’s hands.[33] Although the subject resolution also passed through the U.S. House of Representatives on April 28, 2023, in a mostly bipartisan vote, its support will likely fall short of reaching the required two-thirds majority to overturn the President’s planned veto.[34]

Whether through TPA, statutorily granted emergency powers, or a presidential Veto, the Executive maintains multiple ways of legally exercising trade policy authority and “tak[ing] the offense on America's trade negotiating agenda.”[35]

Conclusion

So, who really gets to decide which duties are levied on certain goods? While the President can exercise legislative grants of authority, issue executive orders, and veto any unfavorable legislation, Congress is ultimately responsible for regulating commerce with foreign nations by introducing tariffs and passing laws that affect them. However, Congress may delegate its trade policy legislation and tariff creation responsibilities to the President, as long as the President allows for congressional oversight and acts within the narrow and temporary scope Congress provides.

Therefore, despite Congress’s constitutionally granted power to oversee international trade policy, President Biden’s statutorily granted authority to impose temporary tariff-exemptions for solar cells and modules will likely remain difficult to overturn.[36]

[1] See 19 U.S.C. § 1318(a) (2023).

[2] The subject merchandise in this executive order, generally referred to as solar cells and modules, specifically refers to “crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials.” Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People’s Republic of China: Initiation of Circumvention Inquiry on the Antidumping Duty and Countervailing Duty Orders, 87 Fed. Reg. 19,071 (Dep’t Commerce Apr. 1, 2022). For a further general listing of tariff classifications in the Harmonized Tariff Schedule of the United States associated with the merchandise falling within this scope, see Id.

[3] Timothy Puko and Phred Dvorak, Biden Invokes Emergency Power in Bid to Resolve Solar Import Dispute; Wall St. J. (June 6, 2022, 6:55 PM), www.wsj.com/articles/biden-administration-to-waive-solar-import-tariffs-for-two-years-11654525408.

[4] Will Weissert, Biden Orders Emergency Steps to Boost U.S. Solar Production, AP News (June 6, 2022, 3:37 PM), apnews.com/article/biden-technology-environment-global-trade-ca939bfc5a428c6692beb3e7b4bf715b.

[5] Press Release, Dep’t of Commerce, Department of Commerce Statement on President Biden’s Proclamation on Solar Cells and Modules, (June 6, 2022), www.commerce.gov/news/press-releases/2022/06/department-commerce-statement-president-bidens-proclamation-solar-cells (last visited Apr. 30, 2023); see also Weissert, supra note 4.

[6] H.J. Res. 39, 118^th Cong. (2023-2024), Disapproving the rule submitted by the Department of Commerce relating to “Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord With Presidential Proclamation 10414”, available at www.congress.gov/bill/118th-congress/house-joint-resolution/39 (last visited May 2, 2023).

[7] Jennifer Doherty, Congress Takes 1st Steps Toward Defying Biden on Trade, LAW360 (Apr. 21, 2023, 11:26 PM), www.law360.com/internationaltrade/articles/1564835?nl_pk=471c1719-883c-4c64-8a92-8d5f1de4546d&utm_source=newsletter&utm_medium=email&utm_campaign=internationaltrade&utm_content=2023-04-21&nlsidx=0&nlaidx=0.

[8] Matthew Daly, AP News, Raimondo: Inquiry on solar imports follows the law, (May 11, 2022, 5:05 PM), available at apnews.com/article/climate-biden-asia-environment-42a392471ac9dee06d6e643574c04860; Press Release, H. Ways & Means Comm., Ways and Means Committee Takes Bipartisan Action to Stand Up for American Workers Against China’s Unfair Trade Practices, (Apr. 19, 2023), available at waysandmeans.house.gov/ways-and-means-committee-takes-bipartisan-action-to-stand-up-for-american-workers-against-chinas-unfair-trade-practices/ (last visited Apr. 30, 2023) (hereinafter H. Ways & Means Comm. Press Release).

[9] Press Release, White H., Statement of Administration Policy: H.J. Res. 39 – A Joint Resolution Disapproving the Rule Submitted by the Department of Commerce relating to “Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord with Presidential Proclamation 10414” (Apr. 24, 2023), available at www.whitehouse.gov/wp-content/uploads/2023/04/HJRes-39-SAP.pdf; see also Zack Budryk, Biden Threatens to Veto House Resolution to End Solar Panel Tariffs Freeze, The Hill, Apr. 24, 2023, thehill.com/policy/energy-environment/3966409-biden-threatens-to-veto-house-resolution-to-end-solar-panel-tariffs-freeze/ (last visited Apr. 25, 2023); Jeff Mason, Exclusive: Biden Would Veto Legislation to Block Solar Tariff Waivers, Reuters, (Apr. 24, 2023, 2:57 PM), www.reuters.com/world/us/biden-veto-legislation-block-solar-tariff-waivers-officials-2023-04-24/.

[10] Although this post focuses primarily on the separation of powers between the legislative and executive branches with regard to international trade policy, the judiciary is also constitutionally charged with “extend[ing] to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; - to all Cases affecting Ambassadors . . . - to all Cases of admiralty and maritime Jurisdiction . . . .”); U.S. Const. art. III, § 2, cl. 1; see Wright, infra  note 14 at 1006, n.16.

[11] U.S. Const. art. I, § 8, cls. 1 & 3; see also David H. Moore, Taking Cues From Congress: Judicial Review, Congressional Authorization, and the Expansion of Presidential Power, 90 Notre Dame L. Rev. 1019, 1037-38 (2015) (noting that the U.S. Supreme Court has supported the authority granted to Congress under the Commerce Clause as “‘plenary,’ ‘complete,’ ‘exclusive and absolute,’ and has recognized congressional supremacy over the executive in foreign commerce.”) (citing Barclays Bank PLC v. Franchise Tax Bd. of Cal., 512 U.S. 298, 324-31 & nn.22, 30 & 32 (1994)).

[12] Margaret M. Kim, Trade Promotion Authority: Evaluating the Necessity of Congressional Oversight And Accountability, 40 Seton Hall Legis. J. 317, 326 (2016).

[13] Cathleen D. Cimino-Isaacs et. al., Cong. Research Serv., R45148, U.S. Trade Policy Primer: Frequently Asked Questions, available at crsreports.congress.gov/product/pdf/R/R45148/8 (last updated Feb. 4, 2021); Shayerah I. Akhtar et al., Cong. Research Serv., IF10156, U.S. Trade Policy: Background and Current Issues, available at crsreports.congress.gov/product/pdf/IF/IF10156 (last updated Jan. 30, 2023).

[14] Laura L. Wright, Trade Promotion Authority: Fast Track for the Twenty-First Century?, 12 Wm. & Mary Bill of Rts. J. 979, 982 (2004).

[15] See the Reciprocal Trade Agreements Act of 1934, Trade Expansion Act of 1962, and Trade Act of 1974. The Reciprocal Trade Agreements Act of 1934 allowed President Franklin D. Roosevelt to negotiate tariff agreements with foreign states and reduce tariff levels through only a Presidential Proclamation, albeit within a pre-approved range without requiring prior congressional approval; Reciprocal Trade Agreements Act of 1934, Pub. L. No. 73-316, 48 Stat. 943 (1934); Kim, supra note 9 at 327; see also 19 U.S.C. § 1351 (2016) (enacted on Jun. 12, 1934); The Reciprocal Trade Agreement Act of 1934, U.S. House of Rep. History, Art & Archives, available at history.house.gov/HistoricalHighlight/Detail/36918 (last visited May 1, 2023). The Trade Expansion Act of 1962 granted President John F. Kennedy authority to negotiate multinational tariff level agreements under the General Agreement on Tariffs and Trade (“GATT”); see Kim, supra note 11, at 327-28; Trade Expansion Act of 1962, 19 U.S.C. § 1801 (2023). The Trade Act of 1974 empowered President Richard M. Nixon to both set tariff rates and regulate commerce with foreign states for a 5-year period during the Tokyo Round negotiations of GATT; Trade Act of 1974, 19 U.S.C. §§ 2191-94 (West 1974); see Wright, supra note 13, at 984-85; Kim, supra note 11, at 329.

[16] While the concept of TPA first took the form of “fast-track” authority granted to the President to conclude international trade agreements through the Reciprocal Trade Agreements Act of 1934, Section 151 of the Trade Act of 1974 introduced the modern form of TPA, which bridges the executive/legislative divide via congressional-executive agreement; see generally Alison Umberger, Free Trade Visas: Exploring the Constitutional Boundaries of Trade Promotion Authority, 22 Geo. Immigr. L.J. 319, pin cite? (2008).

[17] Office of the United States Trade Representative, Trade Promotion Authority, available at ustr.gov/trade-topics/trade-promotion-authority (last visited May 2, 2023) (hereinafter “USTR TPA”).

[18] Cimino-Isaacs, supra note 13, at 29.

[19] Mistretta v. United States, 488 U.S. 361, 372 (1989); see Wright, supra note 14, at 989.

[20] USTR TPA, supra note 20.

[21] Cimino-Isaacs, supra note 13, at 28.

[22] H. Ways & Means Comm. Press Release, supra note 8.

[23] U.S. Const. art. II, § 2 (The President “shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the Senators present concur”); The Appointments Clause of Article II, Section 2, Clause 2 also allows the President to exert influence over U.S. trade policy through nomination of Executive agencies’ principal officers. However, this article focuses on actions the President can take alone; (“[The President] shall nominate, and by and with the advice and consent of the Senate, shall appoint ambassadors, other public ministers and consuls.”); see also David H. Moore, The Missing D in U.S. Foreign Relations Law, 109 Geo. L.J. 1139 (2021); Wright, supra note 14 at 981.

[24] National Constitution Center, Executive Orders 101: What are they and how do Presidents use them?, available at constitutioncenter.org/blog/executive-orders-101-what-are-they-and-how-do-presidents-use-them (last updated Jan. 23, 2017).

[25] U.S. Const. art. I, § 7, cl. 2.

[26] Christopher A. Casey, Cong. Research Serv., IF11030, U.S. Tariff Policy: Overview, available at sgp.fas.org/crs/row/IF11030.pdf (last updated Feb. 28, 2023).

[27] Cimino-Isaacs, supra note 13, at 42 (citing Vivian C. Jones, Cong. Research Serv., IF10786, Safeguards: Section 201 of the Trade Act of 1974, available at sgp.fas.org/crs/misc/IF10786.pdf (last updated Jan. 13, 2021)); 19 U.S.C. § 2251 (2023); 19 U.S.C. § 2411(2023).

[28] See Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 550 (1976) (holding that the President properly exercised his statutorily granted authority under § 232(b) of the Trade Expansion Act of 1962 to “impose monetary as well as quantitative methods to discourage imports of articles when the Secretary of the Treasury found that they were being imported in such quantities as to threaten national security.”); 19 U.S.C. § 1862 (2023).

[29] Cimino-Isaacs, supra note 13, at 42.

[30] 19 U.S.C. § 1318(a) (2023).

[31] Id.

[32] Id.; Press Release, White H., Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia (June 6, 2022), available at www.whitehouse.gov/briefing-room/statements-releases/2022/06/06/declaration-of-emergency-and-authorization-for-temporary-extensions-of-time-and-duty-free-importation-of-solar-cells-and-modules-from-southeast-asia/.

[33] U.S. Const. art. I, § 7; see also Patrick Corcoran, Trade and Wars: Checking the President’s Overbroad Trade Sanction Authority, 23 N.Y.U. J. Legis. & Pub. Pol’y 687, 712 (2021).

[34] Kelsey Tamborrino, Politico, House Votes to Rescind Biden’s Solar Tariff Moratorium (Apr. 28, 2023, 11:32 AM), available at www.politico.com/news/2023/04/28/house-vote-biden-solar-tariff-00094388.

[35] Wright, supra note 14, at 984 (citing Extraterritorial Income Laws and U.S. Competitiveness: Hearing Before the Senate Fin. Comm., 107th Cong. (2002) (statement of Robert B. Zoellick, U.S. Trade Representative)).

[36] For a further breakdown of how the roles and responsibilities of U.S. international trade policy are divided, the Congressional Research Service published an illustrative review in 2022 found under the following citation: Shayerah I. Akhtar, Cong. Research Serv., IF11016, U.S. Trade Policy Functions: Who Does What?, available at sgp.fas.org/crs/misc/IF11016.pdf (last updated Dec. 7, 2022).