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Legal Memorandum

To: North Carolina State Legislature

From: James Blocker, Counsel

Subject: Constitutionality of Proposed Tariff under USMCA

Date: 2/5/24

Issue

The central issue to be addressed is whether North Carolina's US$3 billion proposed tariff

on imported furniture and textiles in other countries conforms with provisions of both the U.S.

Constitution and the USMCA treaty. It raises questions about the legality of such state-level

trade measures about a broader international and national legal structure.

Rule

Two key aspects shall inform on the constitutionality of the proposed tariff. To begin

with, it includes careful consideration of the restrictions outlined in terms of remote commerce

by a U.S. Foreign Commerce Clause provision, which delineates powers shared between federal

and state governments over matters connected to foreign trade issues. In addition to this, the

assessment encompasses USMCA provisions and notes compliance with international trade

commitments.

Foreign Commerce Clause

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The U.S. Constitution gives Congress the authority to regulate and manage international

trade through its Foreign Commerce Clause. This clause in the Constitution can be considered a

limitation for individual states, preventing them from adopting rules and regulations that hamper

or discriminate against international trade.

USMCA

The USMCA is an international agreement in which the United States of America, Mexico, and

Canada agreed on trade conditions. It generates obligations and rules to facilitate equitable trade

without restriction among the member countries.

Application

Foreign Commerce Clause Analysis

As a state-level trade restriction, the proposed tariff falls under the Foreign Commerce

Clause. In general, states cannot implement protectionist policies that hinder the import of goods.

However, state control could be more effective, and the federal government could take over

when discussing international trade. For example, in cases such as Welton v. Missouri (1875)

and H.P. A broad reading of the Commerce Clause prohibits states from practicing economic

isolationism. In the case of Philadelphia v. New Jersey (1928), the Court decided to nullify a

state statute that acted against out-of-state garbage disposals, bringing to light the need for a

national uniform in the limelight market (Hong et al., 2019).

USMCA Analysis

Promoting commerce among the states that have signed the USMCA is its main goal. The

conditions of the agreement would not be met by a protective tariff of that kind directed at goods
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manufactured elsewhere. The USMCA expressly forbids member nations from levying taxes or

levies on exports to one another under Article 32.2. The agreement aims to improve economic

inclusion and create fair playing fields. Within the scope of the USMCA, any state action that

deviates from these constraints may be contested (Kumar & Babu, 2023). Fair competition is

ensured in the agreement, and actions discriminatory toward member nations are avoided.

In conclusion, constitutional challenges may arise from the proposed 25% tax on textile

and furniture products made in other countries to support domestic businesses and create jobs.

The USMCA does not allow discriminatory tariffs between member states, and the Foreign

Commerce Clause prevents States from imposing unfair international trade restrictions. In North

Carolina, it is recommended that government officials reconsider setting up such tariffs since

they might contradict the USMCA with the U.S. Constitution. State-level incentives and

partnerships with federal trade policy are other approaches that achieve economic goals but are

consistent with international pacts and constitutional principles. The American economy depends

heavily on States, but they must act according to federal responsibilities in international trade.

State interests and national responsibilities should be evened for a coherent economic strategy to

work.
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References

Baker, J. S., & Keiser, L. (2019). NAFTA/USMCA Dispute Settlement Mechanisms and the

Constitution. U. Miami Inter-Am. L. Rev., 50, 1.

Hong, P., Park, Y. W., Hong, P., & Park, Y. W. (2020). The United States-Mexico-Canada

Agreement (USMCA) and Japanese Firms. Rising Asia and American Hegemony: Case

of Competitive Firms from Japan, Korea, China and India, 153-163.

Kumar, V., & Babu, R. R. (2023). 5. United States-Mexico-Canada Agreement (USMCA)

Disputes. Yearbook of International Environmental Law, yvad048.