I signed the economists’ amicus brief in V.O.S. Selections, Inc. v. Trump because it challenges something deeper than just one set of tariffs—it challenges the use of emergency powers in a way that threatens the stability and predictability of US trade policy for US businesses and consumers.
The main points are simple enough: bilateral trade deficits (and surpluses) are normal, not an emergency; tariffs are not the correct instrument to fix bilateral or aggregate deficits and may make them worse; and the harms to the US economy are much greater than any perceived losses from trade and revenue collected from tariffs.
But first off, what’s so different about these tariffs in the first place? The Trump administration’s 2025 tariffs were not imposed through trade statutes like Section 232 of the Trade Expansion Act of 1962. Instead, they were issued under the International Emergency Economic Powers Act (IEEPA), a law originally intended to restrict financial transactions with hostile foreign actors during national security emergencies. By invoking IEEPA to impose tariffs without congressional input, a new investigation, or a transparent policy process, the administration expanded presidential trade authority far beyond what Congress intended.
The brief, filed in support of the plaintiffs and signed by twenty-eight economists from across the political spectrum, argues that the use of IEEPA in this context violates the statute’s structure, text, and purpose. We are concerned not only about the legality of these particular tariffs, but about what it means for the future trade policymaking process if the courts allow this kind of executive overreach.
IEEPA Was Never Meant to Authorize Tariffs
The IEEPA was enacted in 1977 to constrain and clarify the use of emergency economic powers, primarily in response to concerns about unchecked presidential authority under the earlier Trading with the Enemy Act. The statute gives the president power to regulate financial transactions and block property involving foreign entities during a declared national emergency.
What it does not do is authorize the president to impose blanket tariffs on all imports, especially not on numerous national security allies. Tariffs are trade policy tools, and Congress has crafted specific statutes governing when and how they may be used. The IEEPA, by contrast, was meant to address national security crises and not as a means to circumvent the established process for evaluating and imposing trade restrictions.
The Trump administration relied on IEEPA to justify new tariffs on multiple countries and products, which requires an “unusual and extraordinary threat” to justify executive action. This rationale was neither supported by a new Commerce Department investigation nor subject to the procedural safeguards Congress built into other trade laws. For example, many have argued that the national security basis for Section 232 tariffs is dubious. But those tariffs followed a statutory process of notice, study, public comment, and implementation.
The Economic Arguments: No Emergency, No Fix, Big Costs
The administration’s justification for invoking IEEPA was largely based on vague claims about economic threats and bilateral trade deficits. But bilateral trade deficits are common, not inherently harmful, and certainly not a national emergency. They arise from broader macroeconomic factors, i.e., differences in savings and investment behavior, not trade policy failures. Countries routinely run bilateral deficits and surpluses as part of normal, healthy trading relationships.
The Trump administration has also ignored the fact that the US runs a trade surplus with many of the countries that were singled out for the higher tariffs. Likewise, the administration only looked at goods trade, and for many countries, the trade deficits in goods are fully or partially offset by US exports of services.
But even if we take the administration’s argument that the US charges lower tariffs than it faces in most foreign markets at face value, the rationale for fixing it with tariffs doesn’t hold any water. The president has argued that foreign countries charge higher tariffs than the US and thus don’t reciprocate US trade openness, and this causes unfair bilateral trade deficits. Many charts were made back in March and April to show the unfair tariff treatment of the US by foreign countries. I agree with the facts in those charts (misleading as many of them were), but they only proved that some countries have high tariffs compared to the US.
We should instead be looking at whether there is any relationship between bilateral trade deficits and relative tariff rates across countries. As a Trumpian measure of tariff fairness, I computed the difference of trade-weighted average foreign and US tariff rates for 150 countries. In short, this measure is positive when foreign countries like China levy higher tariffs on average than the US levies on them. It’s zero or negative for countries like Canada, where the US-Mexico-Canada Agreement means most tariffs are zero. I then computed the ratio of US imports to exports by trade partner, which is just another way to measure the size of trade deficits or surpluses. The ratio of imports to exports is higher against deficit countries and lower where the US has a surplus.
You might think that if other countries charge higher tariffs on our exports than we do on their imports, the U.S. would run a big trade deficit with them. That sounds logical, but when I looked at the data, I found the opposite. Countries with higher tariffs don’t tend to have bigger trade surpluses with the U.S.
In fact, if you put all the countries on a graph with their average tariff levels on the horizontal axis and the size of the US trade deficit with them on the vertical axis, you get a line that slopes down. That means higher foreign tariffs are actually associated with smaller US trade deficits. If there’s a strong connection between trade deficits and foreign country tariffs, we should see many dots in the upper right quadrant (high foreign tariffs and a trade deficit) and many in the lower left quadrant (low foreign tariffs and a trade surplus). But while there are many cases in the upper right quadrant that the administration cherry picks to make its arguments, there are also many in the lower right quadrant. But wait, that’s countries that levy high tariffs against US goods. And yet, there is a trade surplus.
So even if you’re someone who hates trade deficits, blaming them on “unfair” foreign tariffs doesn’t match what the data show. Moreover, there doesn’t appear to be any “emergency” bilateral trade deficit with many of these countries. Nonetheless, new emergency tariffs have been put in place.
But even if tariffs didn’t cause the trade deficits, could imposing US tariffs shrink them? No, and it might be incredibly counterproductive. Tariffs can actually increase the overall trade deficit by raising input costs for US manufacturers and decreasing their competitiveness in global markets. That dynamic undermines exports even as it taxes imports, doing little to address the root causes of the imbalance.
Worse still, the costs of these tariffs are substantial and widely dispersed. Businesses that depend on imported intermediate goods faced steep increases in costs—costs that were often passed on to downstream industries and consumers. This disrupted investment, curtailed growth, and injected volatility into supply chains that had taken years to build. We know this is true in general, but we have very recent evidence from many waves of tariffs imposed by the first Trump administration.
Below is a chart showing how US total exports start to fall below their growth trend as successive waves of tariffs are imposed on washing machines, aluminum, steel, and over half of all imports from China. Why do import tariffs reduce exports? In my research with Fariha Kamal (Federal Reserve Board) and Ryan Monarch (Syracuse), we estimated that the cost of tariffs was 2 percent of payrolls in the manufacturing sector. That might sound small, but we also look at how much the firms hit by new import tariffs were exporting. The more tariffs they had to pay, the larger the decline across a range of products that they exported to the whole world. The punchline being that a US import tariff can be like a tax on your own exports.
The harm to economic activity is not an abstract concept only evidenced in fancy plots created by economists. The stories from the plaintiffs in the current US tariff litigation are case studies that demonstrate a number of broader points.
- David Levi, founder of MicroKits, designs hands-on electronics kits for kids. He can’t make these kits in the US, and he can’t sell them profitably with tariffs as high as 150 percent. These cost spikes forced Levi to delay product launches, suspend hiring, and consider moving production overseas. That is undermining the US manufacturing the tariffs purportedly aimed to protect.
- Dan Pastore, the founder of FishUSA, faced skyrocketing duties on goods sourced from Asia. As a result, product launches were paused and pricing became unpredictable. He notes, “We can’t predict what the tariff rates will be by the time they arrive at a US port. That kind of uncertainty is devastating for a company like ours.”
- Terry Precision Cycling has already paid $25,000 in new tariffs and expects that could balloon to over $1 million in 2026. The CEO says, “That’s more than we spend on payroll. For a small business like ours, that’s not a hit we can absorb. It’s a knockout punch.”
These stories reflect the broader economic reality that an arbitrary and unpredictable set of tariffs won’t simply be absorbed by foreigners or come out of the profit margins of US firms. If these firms can’t cut wages, employment, or take on losses indefinitely, then they will have to pass those costs along in the form of higher prices. If US consumers can’t afford it, they may close up shop altogether.
I would venture to guess that for every company the Trump administration trots out claiming the tariffs are helping their business, there are another 1,000 companies like FishUSA and Terry Cycling making difficult decisions about their future all over the US.
Why Economists Are Speaking Out
This matters for more than just legal doctrine. As an economist who studies trade and uncertainty, I know that firms thrive in environments where rules are predictable, transparent, and rooted in law. When presidents can unilaterally change the terms of trade based on open-ended declarations of emergency, the costs ripple through the economy.
Businesses become hesitant to invest in global supply chains or long-term projects when they fear that sudden executive action could upend market access. International partners lose trust in the United States and may retaliate with tariffs of their own, undermining the very principles of open commerce that have long supported US economic leadership.
The amicus brief brings these concerns to the forefront. It argues that allowing IEEPA to serve as a general-purpose trade law undermines Congress’s role in trade policymaking, invites legal uncertainty, and creates damaging economic spillovers.
Why This Case Matters Beyond the Liberation Day tariff proclamations
Reasonable people can disagree on the use of tariffs in certain situations. But there must be a process that includes facts, findings, deadlines, and accountability. Multiple trade statutes already on the books, such as Section 232 and Section 301, reflect that design.
The IEEPA was never supposed to serve as a fallback option for when other laws prove too constraining on the Executive Branch. If the president can simply declare a vague economic emergency and use IEEPA to impose tariffs on allies or adversaries alike, then the entire body of US trade law becomes optional.
If courts ratify the use of IEEPA for imposing tariffs, future presidents will have every incentive to use the same rationale to sidestep Congress on a wide range of trade issues. This undermines trust, reduces the incentive for negotiation, and sends a message to the world that US trade policy is not governed by law, but by proclamation. This is one reason the Trump administration has struggled greatly to conclude 90 trade deals in 90 days. It’s clear to both US allies and adversaries that a trade deal with the US president may not be worth the paper it is written on.
That’s why I signed the brief. Trade policy should be anchored in evidence, process, and law. Economists may not always agree on the merits of specific trade actions, but we should agree that those actions must rest on lawful authority and a predictable process.
This case gives the court a chance to say so clearly.