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.

Comments

[Bob from Ohio]

"surely qualifies"

surely!

[MaddogEngineer]

"pretty obviously"

Obviously! (I don't know whether Somin is correct or not, I merely object to his casting of all this opinions as unassailable. Something that, for example, Professor Adler does not do in his blogging here.)

The Charles I ship money analogy is exhausting, because again, unlike the King of England, if Congress constitutionally delegated this authority to the president, it is nothing like that. Unlike Charles' assertion of his divine right, the administration is basing these actions in statutes.

[David Nieporent]

I don't know whether Somin is correct or not, I merely object to his casting of all this opinions as unassailable.

See generally Orin S. Kerr, A Theory of Law, 16 GREEN BAG 2D 111 (2012).

[MaddogEngineer]

Why? Why should I do the work to make your point for you? I don't even know which point of my previous you think you are countering.

[Voize of Reazon]

You should read Kerr's paper, it is really quite illuminating. Here's a link.

[ah....Clem]

And that's why we all owe Professor Kerr a beer.

[MaddogEngineer]

So a second person telling me about it, but not why it's relevant here. At least you offered a link.

But you're obviously correct, Professor Kerr's paper will obviously negate me having any opinions about things.

Not sure why what a law professor wrote is relevant to my original comment, because:

1. I was objecting to Somin's declaration of his opinions as indisputably correct. How he expressed himself, not whether he was right or wrong. Because as I said originally, I think Professor Adler often thinks he correct, but does not write in such grandiose terms.
2. My observation about the history of Charles' ship money is not wrong, because that was at a time before Parliament had secured its supremacy over taxation with the Crown. Indeed, it was a fight which ultimately led to that parliamentary supremacy. As I said originally, if Trump has this authority, it's because Congress has given it to him. He is not able to legitimately claim any extra-constitutional authority. If he tries, the courts, including SCOTUS, will overrule him.

[Voize of Reazon]

Maddog, lighten up. You didn't check out the link did you?
Hint: It's a joke.

[thesafesurfer]

You just object because you have nothing better to do.

[ReaderY]

He’s not even pretending Congress delegated the authority to condition export permits on paying him cash “taxes.” The fact that it constitutionally can’t is besides the point.

[MaddogEngineer]

To the extent this is true, it's a function of the administrative state delegation. A similar thing has been said about DACA or Biden administration asylum policies. Or many of the COVID emergency actions.

This all is fundamentally a problem of too much leeway to the executive, given what other authority has already been granted. Maybe call them administrative penumbras. But like I said, if it has not been delegated, it should be struck down.

If anyone thinks I approve of any of this, you are mistaken. I continue to point out we didn't just arrive at this moment on January 20, 2025 (or 2021). Like I keep saying, progressives never imagined their administrative state would ever be wielded against them. What Trump is doing is not conservative, which is why I oppose it. I continue opposing the argument that these things are only wrong because Trump is doing them. The imperial presidency bed has been made a while ago. You all want to say this a political cultural problem. I agree.

[Purple Martin]

"...…if Congress constitutionally delegated this authority to the president..."

Must be a lot of work to constantly invent support for your point by reversing the point of your opponent:

...except that in the case of Trump's export taxes, the written Constitution explicitly forbids his taxes. In that respect, Trump is even more abusive than King Charles was…

Though it's certainly easier if one strives to remain unaware of your opponent’s full argument. I'm glad Somin kept the blockquote from his article as short as he did, but his ellipses skip over substantial relevant detail, such as:

[Trump] 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. The U.S. Court of International Trade struck down these tariffs in a ruling covering cases brought by five small businesses and twelve state governments (I am co-counsel for the plaintiffs in the former case). The CIT rightly ruled that [a legislative act such as] IEEPA does not delegate such sweeping power to the president, and that it would be unconstitutional if it did. The case is now on appeal before the U.S. Court of Appeals for the Federal Circuit.

Yes, the cognitive dissonance resulting from the need to create so many arguments against things you would likely support if not for the identity of the source and beneficiary—like only congress, not the president, has the power to tax; and the constitution forbids export taxes even from congress—certainly must be truly exhausting.

[Fusilier]

Has the plaintiffs filed a response to the DOJ'S letter to the Appeals Court that declaring Trump's IEEPA Tariffs illegal will cause another Great Depression?

[David Nieporent]

Probably submitting, "This is a batshit crazy letter" is unnecessary.

[thesafesurfer]

A fee is not a tax. The administration did not impose the fee. Invidia agreed to the fee.
Professor Somin misrepresents the facts in evidence.

NVIDIA Corp (NVDA) Agrees 15% Charge on H20 Sales to China
https://finance.yahoo.com/news/nvidia-corp-nvda-agrees-15-193232062.html

Nvidia and AMD agree to pay 15% of China chip export revenues to US
https://www.theguardian.com/technology/2025/aug/10/nvidia-amd-china-chip-sale-revenues

[David Nieporent]

1. A fee, unless it is an actual reimbursement for costs incurred, is in fact just a tax.

2. Why are you saying that they agreed? Not only does everyone knows that, but it's in the post. Did you bother to read the post before responding?

3. Anyway, that they "agreed" is of no moment, any more than a traffic cop demanding, "Pay me a 'fee' of $100 and I won't issue you this ticket," could argue, "Well, the driver 'agreed' to pay it."

[Bill Poser]

"Did you bother to read the post before responding?" A disturbing percentage of comments suggest a failure either to read the post or to understand it.

[ReaderY]

It’s more like someone facing “your money or your life” ‘agrees’ to give up the money.

[thesafesurfer]

Are you so lazy that you did not read the first sentence of the article where Somin says an agreement was "IMPOSED?"

"The Trump administration has imposed a "deal" on chip manufacturers Nvidia and AMD..."

I simply provided evidence that there was an agreement and nothing was imposed.

You are also too lazy to look up words in a dictionary to learn their meaning so I provide those from the OED.

Fee-The sum which a public officer is authorized to demand as payment for the execution of his official functions.

Tax-A compulsory contribution to the support of government, levied on persons, property, income, commodities, transactions, etc., now at fixed rates, mostly proportional to the amount on which the contribution is levied.

[ReaderY]

Sorry, but Trump could only withhold the permits for national security reasons. if exports would not violate national security, Trump had to give the permits. And he concluded they didn’t. His witholding them anyway therefore took their valuable property that he had no right to take. When people “agree” to pay a kidnapper a ransom to get back someone or something the kidnapper had no right to take, it’s not a genuine agreement. This is no different.

[Fusilier]

Agreed! The government is only allowed to charge fees that are commensurate with their costs for the process involved.

[Life of Brian]

Anyway, that they "agreed" is of no moment, any more than a traffic cop demanding, "Pay me a 'fee' of $100 and I won't issue you this ticket," could argue, "Well, the driver 'agreed' to pay it."

You know, we really could have used this sort of sage if edgy thinking in last Friday's open thread when we were being patiently instructed that everyone "agreed" to get a COVID vaccine. Better late then never, I suppose.

[ReaderY]

The members of a constitutional republic agree to abide by the laws duly enacted by their elected representatives. That’s what consent of the governed means. Don’t like it, find another country more to your liking.

[ReaderY]

In other words, as long as he doesn’t use the letters “t”, “a”, and “x” consecutively in the word describing it, it’s not a tax and therefore it’s OK.

And these are people who once bullshitted us that they didn’t like taxes?

[Bill Poser]

Do those harmed less directly have standing, e.g. shareholders, whose stock is arguably made less valuable, employees whose compensation is likely to be less than it might be with more revenue, or suppliers who arguably won't get as much revenue?

[bernard11]

It seems to me that shareholders, especially large ones, should have standing.

For example:

Nvidia

AMD

[David Nieporent]

Shareholders might have standing to sue the company/its officers/its board — assuming they could get past the business judgment defense — but would not have any standing to sue the U.S. government.

[Voize of Reazon]

No derivative standing?

[ah....Clem]

Might some other chip maker, such as intel, have standing sue to allow them to sell to China, but without having to pay the 15%?

It might be a tricky argument, but the gist is that they should be able to sell to China just like the other companies because (insert legal reasoning here), but since the 15% "fee" is an illegal tax they shouldn't have to pay it.

Of course, this assumes that Intel won't just go along with the shakedown and cut their own deal.

[ReaderY]

Just as critical as the prohibition on export taxes is the requirement that all taxes be uniform and appropriated by Congress.

President Trump is asserting a power to collect revenues to be used however he he sees fit, entirely outside of Congress in either collection or expenditure, analogous to Charles I’s attempt to collect ship money. He is attempting to run the government not as an executor of laws, but as a primary sovereign. He is asserting powers that are monarchical, not executive, in character.

This is not just no tax on exports. This is no taxation without representation.

Once the precedent is established that a President can use permits and government services to shake people and businesses down for money, we become a government not of laws but of extortionists.

And this in the name of a party that once claimed it didn’t like arbitrary taxes of overbearing government?

[MaddogEngineer]

Perhaps I should introduce you to the facts of Loper Bright Enterprises v Raimondo. You know, the case that the Supreme Court used to overturn the Chevron decision.

The federal government was requiring fishing companies to pay for federally mandated observers on their boats. (Case still ongoing, but now back in the lower courts for them to decide, not the agency, whether this is supported by the relevant statute.) That sounds an awful lot like this fee here, just paid to a third party, for some kind of government action. A kind of extortion--don't pay for the inspectors? No fishing for you! The fishing companies are claiming the statute does not require them to pay for these inspectors, which are themselves an administrative action. (I have a friend in the fishing game, and he's been very bothered about federal interventions beyond what he thinks the law allows.) So like I said above, if this customs fee is not supported by statute, or is determined to be an export tax, then it should be struck down. But it's not like Charles ship money, because it won't continue absent any law.

[ah....Clem]

...Loper Bright Enterprises v Raimondo... That sounds an awful lot like this fee here

No, it doesn't.
For one, the fishermen are not exporting their catch, so it's not a verboten tax on exports.
For another, they are not paying a percentage of their sales (i.e. a tax)
Plus, with the fishermen, there is actually a statute passed by congress that may or may not support the fee; With the chips, there isn't even a statute being used as a fig leaf to cover up the illegal tax.

So, really, the two are quite dissimilar.

[ReaderY]

What if the companies involved simply don’t pay? They have their export permits. Why not let Trump sue to collect?

[loki13]

Because if they don't pay, Trump will just yank the permits.

Forget it, Jake. It's Trumptown. Not the rule of law.

"That's a pretty nice company ya got there. Be a shame if something happened to it."

[ReaderY]

And? Why can’t the companies get an injunction at that point? By granting the permits in the first place, Trump concedes there is no national-security basis for withholding them. Trump is empowered to make national security decisions. While there might have been an argument before the permit was granted, it seems to me granting the permit ends the argument and gives Teump no leg to stand on. It’s pretty obvious that yanking a permit for not paying extortion money is not a genuine national security decision and indeed has nothing to do with national security. Why can’t the company argue that Trump has no such power?

[loki13]

Because you're thinking in terms of the law, and not in terms of reality.

These are companies. They are risk averse. Sure, they could fight this, except ... that will cost money and time and increase uncertainty. And in the meantime, Trump has the entire power of the federal government to completely fuck with them.

You are assuming normal process. This isn't normal. He can just send regulators after them, make their lives hell, threaten them on social media, arbitrarily enact tariff on their supply chains, and do whatever he wants.

Sure, maybe the courts will eventually vindicate their rights, but that's a slow process.

I completely agree that they should stand up for their rights, but it's not like there are volumes of Profiles in Courage written about corporations, are there?

[loki13]

I happen to agree with Somin on both points (and I mentioned this tax in the Friday open thread before he posted about it). But extorting companies is just part of the racket for the United States of Trump. Too many examples to list now.

Anyway, I am waiting for Brett Bellmore to come in with his argument that he kept making during the last four years of the Obama administration and ESPECIALLY during the Biden administration- that standing is BS, and someone gets to sue over this, because it is wrong. He felt very strongly about it. Posted all the time about it.

Looking forward to that!

(I believe in strong standing rules, and the enforcement of same, even when, as in this situation, it friggin' sucks.)

[Daddyhill]

So this is a tax, yes? To be extracted from Nvidia and AMD? I vaguely recall something I learned in middle and high school, something about "No taxation without representation!" I imagine Americans in general have heard the same thing at some point. So, are Nvidia and AMD being taxed without representation? Or does their representation consist of something other than elected representatives in Congress? Something that perhaps wouldn't look good in the sunlight? Just curious...

[F.D. Wolf]

The notion that a party cannot waive constitutional rights in exchange for a government benefit is nonsense, particularly coming from a constitutional law professor.

It happens thousands of times every day when a criminal defendant waives his rights to a jury trial in exchange for a particular sentence. Government employees waive some free speech rights in exchange for government employment. States often waive their Tenth and Eleventh Amendment rights in exchange for federal dollars. Government contracts come with government conditions. If one does not like the conditions, he is not obliged to enter into the contract.

The Export Controls Reform Act explicitly gives the President the power to ban certain exports, grant license exemptions for those exports, place conditions on those licenses, and revoke those licenses. How does a President “usurp” a power Congress has very explicitly delegated to him?

Everybody wins. The chip makers get to export their products and dollars pour into the U.S. Treasury. The bulk of the caterwauling comes, as per usual, from the people whose only guiding principle is , “If Trump’s for it, I’m against it.”

[David Nieporent]

The notion that a party cannot waive constitutional rights in exchange for a government benefit is nonsense, particularly coming from a constitutional law professor.

He didn't say anything of the kind, and apparently you haven't heard of the concept of unconstitutional conditions.

Also, while one can often waive a personal right, one can't "waive" constitutional limitations on government power. If the constitution says that government (or one particular branch of government) cannot do X, then the government cannot do X, regardless of whether someone acquiesces to it.

The Export Controls Reform Act explicitly gives the President the power to ban certain exports, grant license exemptions for those exports, place conditions on those licenses, and revoke those licenses. How does a President “usurp” a power Congress has very explicitly delegated to him?

It doesn't explicitly give the president the power to tax those exports. It doesn't implicitly give the president the power to tax those exports. It can't, because the constitution does not permit taxes on exports, period.

And again, what is it with the bizarre Trumpian monarchial idea that if the president is vested by Congress with discretion that he can't be found to have engaged in an abuse of that discretion?

[Black Richard]

The Bulwark.