Use and Defuse the Cold War’s Unexploded Ordinance

Introduction

Regulation of the US economy runs on (at least) two tracks. On one, which includes the majority of domestic environmental regulation, Congress passes broadly worded statutes that generally delegate authority to administrative agencies to establish the regulations that actually govern private conduct. In recent years, however, courts have become increasingly skeptical of administrative action, declining to defer to agency interpretations of the statutes they administer and enjoining a wide range of executive branch actions. On the second track, presidents regulate the US economy under Cold War–era emergency and foreign affairs delegations that contain few (if any) limits, while courts broadly look the other way. Given political polarization in Congress and the differences in how courts review actions on the two tracks, future administrations will likely be tempted to use these powers to solve a wide range of problems. To date, however, only the Trump administration has given into the temptation, while Biden’s largely did not. This essay argues that the next administration should deploy these powers aggressively in the short term to encourage the development of a greener, more equitable US economy. In the medium term, the next administration should work with Congress to codify its green economy policies into law in exchange for reforming the president’s emergency and foreign affairs powers.

How We Got a Trade War

Within the federal government, Congress has exclusive constitutional authority over trade.¹ For much of the 20th century, it largely delegated this power to the executive, which in turn negotiated trade agreements and dealt with the ordinary concerns of importers and corporations. But, in a century marked by two world wars and a decades-long contest for global influence with the Soviet Union, Congress also worried about the extraordinary. It therefore passed a series of laws that armed the president with the power to regulate the national economy and raise barriers to foreign trade in response to emergencies or other national security threats.² These statutes usually did not require any meaningful deliberative process before the executive branch could act, nor did Congress embed any of its own substantive policy choices as limits on executive discretion. Instead, Congress gave the executive branch what often amounted to carte blanche to act when the administration thought it necessary to do so. Many of these authorities were used sparingly, if at all, and those that were used regularly were deployed for specific purposes like sanctions. But collectively they provided presidential administrations with the authority to respond to crises like the Iranian Revolution and hostage crisis, the Arab oil embargo, and balance of payments issues.

At the end of the Cold War, Congress left these statutes on the books. They thus lay in the US Code like so much unexploded ordinance, waiting for some future administration to stumble upon them. In its effort to “move fast and break things,” the Trump administration unearthed these authorities and has used them to seize unprecedented unilateral control of US economic policy. During his first term, President Trump used Section 232 of the Trade Expansion Act, which authorizes the president to “adjust the imports” of products he determines threaten to impair the national security, to impose tariffs on steel and aluminum imports.³ Under Section 301 of the Trade Act of 1974, which authorizes a range of trade restrictions in response to other nations’ discriminatory or unfair trade policies, he imposed substantial tariffs on Chinese imports. President Trump opened his second term with tariffs on virtually all countries’ exports to the United States under the International Emergency Economic Powers Act (IEEPA), which authorizes the president to “regulate . . . importation,”⁴ and used the tariffs to negotiate potentially significant agreements with approximately a dozen US trading partners, including the European Union, Japan, and South Korea.⁵ After the Supreme Court held that IEEPA does not authorize tariffs, the administration moved to reimpose tariffs under several other Cold War statutes, including Section 301.

The Promise and Peril of Cold War–Era Foreign Commerce Statutes

These Cold War–era statutes present both opportunities and dangers for policymakers looking to address policy priorities like climate change, inflation, and economic inequality that have been neglected by the Trump administration. In terms of opportunities, these authorities allow swift action. As the Trump administration has shown, notwithstanding their foreign focus, these statutes can be used to pursue a domestically focused industrial policy agenda. Using them this way is attractive. Congress today struggles to even fund the government on a regular basis, let alone provide comprehensive legislation to address the nation’s most pressing concerns. And the executive branch is not hampered by the internal polarization and multiple veto points that afflict Congress. The executive branch’s incentives are generally to act to address problems that it can take credit for solving and for which it will be blamed if they go unaddressed, while the collective nature of Congress makes its incentives to solve problems considerably weaker. Finally, notwithstanding the recent courtroom defeats for some of the Trump administration’s tariff policies, judicial review of actions taken under these statutes is often considerably more deferential than for actions taken pursuant to domestic delegations. This limited role for judicial review flows in part from the fact that these statutes are drafted in very broad terms, in part from the fact that the delegations are often to the president and hence not subject to review under the Administrative Procedure Act, and in part from the fact that courts often defer to the executive branch in matters of foreign affairs and national security, while the Supreme Court’s Loper Bright decision curtailed deference to agencies with respect to domestic delegations.⁶

And yet, giving Congress pride of place where the economy is concerned makes a lot of sense. Courts can only outright strike down congressional acts if they are unconstitutional, which reduces some of the concerns about variable standards for judicial review in the context of executive actions. Policy changes made by Congress are also more durable than policies made by executive order, which can be reversed by the next president or, as the Trump administration has demonstrated, can sometimes change day-to-day even within a single administration. That certainty, in turn, allows the business community to invest in reliance on a stable legal framework over the period of time it takes to bring new projects online—a critical feature for driving new investments in the United States, especially in nascent industries like those that populate green technology.

A Two-Track Use-and-Defuse Agenda

The trade-offs between executive and congressional action might seem to put the next administration in a bind. Indeed, the Biden administration seemed torn about how to proceed. With some exceptions, such as somewhat timid use of the Defense Production Act, it resisted the urge to rapidly deploy these authorities. At the same time, though, it left in place the basic framework the first Trump administration established, adjusting policies on the margins in response to specific concerns or negotiations with allies. The result was that the Biden administration neither used these extraordinary powers that the Trump administration had unlocked in a more targeted, effective way,⁷ nor did it work with Congress to reform them in order to prevent their future abuse.

Fortunately, the next administration does not face an either/or choice in this regard. Upon taking office, it should rapidly deploy the executive branch’s broad authorities to support a green transition in a way that addresses the economic insecurity now keenly felt throughout so much of the United States. Space does not permit a comprehensive list of policy proposals, but one place to start is with the Section 232 duties on metals, which provide a natural starting point to build a US carbon border adjustment mechanism.⁸ The Biden administration, under the auspices of the Global Arrangement on Sustainable Steel and Aluminum (GASSA), attempted to implement exactly this kind of plan through negotiations with the EU. If successful, GASSA would have created a transatlantic trade agreement that would have decreased consumption of dirty steel in two of the world’s largest markets, which could have later been expanded to other countries.⁹ Ostensibly, the negotiations foundered on technical disagreements related in part to the different structures of EU and US carbon-reduction measures.¹⁰ But the Trump administration, upon retaking office and imposing tariffs, was able to reach a deal quickly with the EU involving meaningful trade concessions, including a commitment to work toward increased flexibilities in the administration of the EU’s Carbon Border Adjustment Mechanism and Deforestation Regulation.¹¹ The key to a deal with the EU, in other words, was the willingness to act boldly and decisively.

Decisive action, though, should not preclude working with Congress to reform the system of emergency and foreign affairs delegations. Direct action on priorities, such as the creation of a carbon border adjustment or the use of the Defense Production Act to encourage the development of green technology domestically, sets the stage for negotiations between the next president and Congress. The basic structure of a deal would involve codifying the president’s policies in exchange for the president agreeing to put guardrails—such as automatic sunset provisions for emergency actions, limitations on the president’s ability to enact domestic regulations based on trade agremeents not approved by Congress, and more robust judicial review of these limits—on the use of emergency and national security authorities. For example, the incoming president could impose a carbon border adjustment on high-carbon products under Section 232 of the Trade Expansion Act. The president could then agree to sign legislation amending Section 232 to create limits on its future use, such as by imposing time limits on any measures adopted or defining more precisely what counts as a threat to US national security, in exchange for a separate statute establishing the US carbon border adjustment mechanism and delegating to the president the ability to administer it, including via negotiations with foreign countries.¹²

Conclusion

Codifying the president’s priorities would give them a much firmer foundation, ensuring that they are not immediately overturned by the next president. At the same time, reforming Cold War–era statutes would allow Congress to reclaim its central role in economic regulation. Both branches thus stand to benefit from this type of deal. The most important winner, though, would be the American public. Such a bargain would allow Congress to act as a check on the type of arbitrariness and regulation-by-whim that has been the hallmark of the Trump administration. Restoring the United States’ global leadership in energy and economic matters starts with implementing thoughtful, targeted policies to spur sustainable economic growth, while rebuilding our domestic institutions.

A deal reforming the president’s statutory emergency and national security powers is also more feasible than wishcasting for broader constitutional reforms that will prove difficult, if not impossible, to secure. Progressives have tended to view the courts, especially the Supreme Court, as biased against progressive policy goals and in favor of conservative ones.¹³ Court reform was a central issue in the 2020 Democratic primary, and many leading thinkers on the left have proposed remaking the Supreme Court through devices such as term limits or court packing.¹⁴ There is also little doubt that past Supreme Court decisions—most notably INS v. Chadha, which ruled the legislative veto unconstitutional—have undermined congressional oversight of the executive branch.¹⁵

But in a political environment in which presidential administrations seem able to pass one major piece of legislation per term, focusing on court reform delivers too little at too high a political cost. To be sure, decisions like Loper Bright and West Virginia v. EPA¹⁶ have resulted in a narrower reading of the executive branch’s delegated powers. But the courts have applied doctrines that require narrowly reading statutory authorities to the Trump administration as well. Most notably, the Supreme Court struck down the IEEPA tariffs under the major questions doctrine, the same doctrine that the court used to strike down the Obama-era Clean Power Plan. More generally, the courts have been the most reliable bulwark against the Trump administration’s most arbitrary and unlawful acts.¹⁷

Our current crisis is therefore not primarily one of judicial overreach; it is one of congressional abdication. Constraining arbitrary executive economic regulation requires reengaging Congress to close the gap between the broad powers that the president enjoys under emergency and foreign affairs statutes and the narrower powers he enjoys under domestic delegations. Encouraging the development of an equitable green economy in the United States depends on putting in place aggressive incentives for private firms to invest in clean technology and jobs. A grand bargain to codify those policies in exchange for reforming executive powers offers an achievable way to meet both objectives.