OPINION:
When the Supreme Court heard arguments last week on President Trump’s emergency tariffs, plaintiffs opposed to the tariffs insisted, “Tariffs are taxes.” That framing gets history and the law wrong.
Tariffs are NOT taxes. They are instruments of foreign commerce regulation and national defense, long recognized as distinct from Congress’ domestic taxing power. That distinction is not a technicality; it is constitutional with deep roots.
The constitutional test for distinguishing a tax from a regulatory duty is simple. A tax raises general revenue for domestic spending; a tariff regulates foreign commerce. Any revenue that results from a tariff is incidental to its regulatory purpose, much like fines or license fees that accompany environmental or banking rules. Tariffs are thus a classic expression of the power to regulate foreign trade, not the power to tax American citizens.
At the Constitutional Convention, the framers granted Congress the power to impose “Taxes, Duties, Imposts, and Excises.” The separation was deliberate: Duties and imposts were not taxes. They were instruments of trade and national policy, not domestic revenue in the modern sense.
In 18th-century language, imposts referred to what we now call tariffs. The first Congress enacted the nation’s first imposts in 1789, levying duties on imports including British textiles, Caribbean sugar and European glassware. They were imposed in part for “the encouragement and protection of manufactures,” as the statute itself declared.
When President Lincoln later championed “protective tariffs,” he referred to them as “a system of defense,” not a revenue scheme. That founding logic has carried forward into modern law.
In Federal Energy Administration v. Algonquin SNG (1976), the Supreme Court unanimously upheld President Ford’s import fees on foreign oil under Section 232 of the Trade Expansion Act. Opponents claimed those fees were taxes; the court disagreed. As the justices explained, “The imposition of a license fee on imports is a method of achieving the permitted end — adjustment of imports — no less than the use of quotas.”
A tariff operates on the same principle: a “monetary exaction” imposed at the border to regulate trade, not to raise revenue. What matters is purpose. If the goal is to adjust trade flows or protect national security, it is not a tax.
The same principle applies to Mr. Trump’s imposition of tariffs under the International Emergency Economic Powers Act, which reads: “The President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise … investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit” any importation of “any property in which … any foreign person has any interest” when confronting an “unusual and extraordinary threat” from abroad.
A straightforward textual reading shows that Congress intended to give the president a broad range of authorities to confront whatever emergency he may face. By linking the specific words “regulate” and “importation,” the statute covers the full range of economic measures used to regulate foreign commerce.
As the solicitor general and the statute itself make clear, it would defy logic and history to permit a president to prohibit all imports from a hostile power yet deny him the lesser authority to regulate those imports through a tariff. The greater power necessarily includes the lesser.
A president defending Americans, not taxing them
Plaintiffs and other critics argue that tariffs are merely a “tax on consumers,” but experience says otherwise. The Trump tariffs during the president’s first term — on steel, aluminum and strategic Chinese imports — produced virtually no measurable inflation. Consumer prices stayed flat even as hundreds of billions of dollars in goods were covered.
Why? Because foreign producers, importers and subsidiaries absorbed most of the cost. That outcome makes perfect economic sense; access to the U.S. market is existential for many foreign economies. They can’t afford to lose it, so they cut prices, absorb margins and keep shipping.
This is the invisible success of tariffs as a regulatory tool. By compelling foreigners to bear the cost of their own mercantilist behavior, tariffs achieve precisely what the Constitution and two centuries of precedent envision: using America’s market power to regulate foreign conduct without burdening Americans at home. That is the opposite of a tax; it is the lawful regulation of foreign trade: an exercise of the nation’s economic sovereignty.
As the solicitor general noted, the best outcome is when no tariffs are paid at all because the conduct changes. That is the essence of regulation, not taxation: success measured not by revenue but by results.
The Founders vested this nation with the power to regulate its commerce and the responsibility to defend it. That principle — that tariffs are not taxes but instruments of national policy — has been acknowledged since the founding and remains true today. When a president uses tariffs to defend the nation’s economic interests, he isn’t taxing Americans; he is defending them.
• Peter Navarro is the White House senior counselor for trade and manufacturing. Follow him at www.peternavarro.com.
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