My New Bulwark Article on Trump's Unconstitutional Export Tax

The article explains why the policy is unconstitutional, but also why it is unlikely to be challenged in court in the near future.

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Today, The Bulwark published my article on Trump's unconstitutional export tax policy. Here is an excerpt:

The Trump administration has imposed a "deal" on chip manufacturers Nvidia and AMD under which they are required to pay the U.S. government 15 percent of revenue earned from computer chip sales to China. Nvidia will do so on sales of its H20 chip, while AMD will be required to pay that percentage of sales of its MI308 chip. This arrangement is likely unconstitutional and sets a dangerous precedent for unilateral executive imposition of taxes without legislative authorization. But it may not be challenged in court anytime soon.

Article I, Section 9 of the Constitution states that "No Tax or Duty shall be laid on Articles exported from any State." The Supreme Court has interpreted this broadly to require "not simply an omission of a tax upon the articles exported, but also a freedom from any tax which directly burdens" exports. Trump's appropriation of 15 percent of the two firms' revenue from chip sales to China surely qualifies as such a tax.

The Supreme Court has held that the Export Clause "does not rule out a 'user fee,' provided that the fee lacks the attributes of a generally applicable tax or duty and is, instead, a charge designed as compensation for government-supplied services, facilities, or benefits." But the payments imposed on the two chip manufacturers pretty obviously aren't user fees, as they are not charges for the use of any government facilities or services…..

The fact that the payments are part of a "deal" with the Trump administration also does not make them constitutional. The executive cannot impose an otherwise unconstitutional tax merely because it has reached an agreement to do so, in this case in exchange for authorizing export licenses. Otherwise, the government could impose taxes in exchange for a variety of discretionary decisions. For example, it could require payment of extra taxes in exchange for providing military protection against foreign attack, law-enforcement protection against criminals violating federal law, and much more. Part of the point of giving the power to tax to the legislature instead of the executive is precisely to prevent this kind of extortion….

The imposition of this unconstitutional export tax must be viewed in the context of Trump's broader effort to usurp the power of taxation from Congress with respect to international trade. He has also tried to illegally use the International Emergency Economic Powers Act of 1977 (IEEPA)—a law that does not even mention tariffs—to impose the most extensive tariffs since the Great Depression, potentially costing Americans trillions of dollars in tax payments…

Blocking the executive from usurping the power of taxation was a major concern of the Framers of the Constitution, who recalled the "Ship Money" abuses of King Charles I, which helped precipitate the English Civil War. Like King Charles, Trump is abusing emergency and national security powers to try to impose massive taxes unauthorized by the legislature, except that in the case pf Trump's export taxes, the written Constitution explicitly forbids his taxes. In that respect, Trump is even more abusive than King Charles was…

Unlike in the case of the IEEPA tariffs, Trump's illegal export tax may not be challenged in court, at least not in the near future. To file a lawsuit, plaintiffs must have "standing." Among other things, that requires them to demonstrate that they have been "injured" by the defendants' illegal actions. The most obvious injured parties in this case are the two chip exporters. But they appear to have decided to accept the "deal" offered by the administration rather than risk again being barred from exporting chips to China entirely.