principles of government
Written by Tyler Zimpfer, Law Fellow, National Agricultural Law Center
The beginning of a new presidential administration brings heightened awareness to areas of government that Americans don’t always consider, such as federal agencies. Recently, U.S. Senators have been reviewing the President’s nominees in confirmation hearings for leadership roles in federal agencies. These confirmation hearings matter. Nominees – often called a “secretary” or “director” – will oversee federal agencies with billion-dollar budgets and a federal workforce of over three million employees. But why is our government structured this way? Are all federal agencies created the same? What powers do these agencies have? And how might a recent Supreme Court decision impact the future of federal agencies?
These questions are relevant to agriculture, because farmers constantly engage with federal agencies. For example, the USDA administers programs through the Farm Service Agency (FSA) and Natural Resources Conservation Service (NRCS) that provides crop insurance, conservation funding, and financial assistance. The EPA oversees pesticide use, air pollution, and water quality laws that impact chemical use. Food producers and processors comply with health and safety standards set by the Food and Drug Administration and the Food Safety and Inspection Service.
Understanding the laws that establish and guide federal agencies is important for agriculture and is the focus of our third topic in the Principles of Government series.
A Brief History of Federal Agencies
The U.S. Constitution grants Congress the power to establish federal official positions and agencies. The power derives from three sources: the legislative power in Article I §1, the Necessary and Proper Clause in Article I §8, and the Appointments Clause in Article II, § 2. Taken together, these constitutional provisions give Congress authority to create agencies to administer the laws Congress makes. Congress must pass an “organic statute” – a statute that creates the agency and gives it certain responsibilities and power. After the agency is formally created, the Constitution authorizes the President to select and direct the officers that will lead the agency, with the advice and consent of the Senate.
Agencies have therefore been around since the onset of our democracy. The first agency, created in 1789, was called the Department of Foreign Affairs, which estimated debts on any imports into the country. The agency later became what we now know as the State Department. Congress continued to create various agencies including the Department of Treasury, the Department of Justice, and the Department of Agriculture throughout the early to mid-1800s. For the first 150 years of the United States, these agencies had fewer responsibilities and were smaller in size and impact than most modern agencies. The federal government currently maintains a list of agencies, which now number in the hundreds.
Structure of a Federal Agency
Not all agencies are created equal by Congress. The “typical” agency (e.g., USDA, EPA, etc.) is led by a single Presidentially appointed, Senate confirmed official (e.g., Secretary of Agriculture, Administrator of the EPA), who oversees the agency’s programs and employees. These agency officials are removable at-will by the President. In slight contrast, an “independent” agency usually consists of a multi-member body with limits on the number of members from one political party versus another. The members of the independent agency can have reasonable restrictions on their removal from office. The more popular independent agencies are the Securities and Exchange Commission (SEC), the Commodity Future Trading Commission (CFTC), and the Federal Reserve.
The Power of Agency Regulations
The Administrative Procedure Act (APA), passed in 1946, was enacted partially in response to the boom of administrative agencies created during the Great Depression. The purpose of the APA was to promote accountability and transparency of the federal agencies who were beginning to regulate the lives of millions of Americans. The APA established the process by which agencies develop and implement “regulations or rules.”
Regulations are especially important because they have the equal force and effect of a law Congress passes. Agencies cannot simply implement any policy they deem necessary. They must implement rules that carry out laws already passed by Congress and delegated to the agencies. Take the Clean Water Act (CWA) for example. The CWA provides the basic structure for preventing pollution into water sources around the United States. The CWA gave the EPA power to enforce and regulate the law. With the CWA as its legal authority, the EPA uses its technical expertise to write the regulations for the law, such as setting wastewater standards for industries and implementing permit programs for pollution discharges. The CWA is an “enabling statute” – a law that confers new or additional powers on an existing agency. Together with the “organic statute” that creates the agency by law, the EPA has broad authority to enforce the CWA as Congress has delegated.
In making regulations, agencies must follow what is called the “notice and comment” process established by the APA. The agency issues a notice of rulemaking and then provides an opportunity for interested persons to comment before a final rule is made. The notice and comment period can be quick for smaller, less controversial regulations, but can last for more than a year on more comprehensive rules. On average, agencies issue 18 regulations for every one law Congress passes.
Resolving Disputes and Enforcing Regulations
Agencies also have the unique power to “adjudicate” various claims related to their regulations and programs. A government official follows the mandates of the APA and the agency’s own rules to resolve a dispute between a private party and the government or between two private parties arising out of a government program. Just as regulations mirror legislative functions, adjudications and orders function similar to a court system. Administrative Law Judges (ALJs) preside over hearings and agency disputes. However, they are not part of the judicial branch but are considered executive officers and appointed by the head of an agency. After all internal processes of review are exhausted, an ALJ’s final determinations may be appealed to a federal court for review.
Deference to Agency Expertise: Recent Developments
This past June, the Supreme Court of the United States decided a pivotal administrative law case in Loper Bright Enterprises v. Raimondo. The Court expressly overruled the Chevron doctrine, referring to a case that gave significant deference to federal agencies in interpreting ambiguous statutes they were charged with enforcing and implementing. Under the Chevron doctrine, a court would defer to an agency’s interpretation of an ambiguous law as long as the interpretation was reasonable and even if the court would have interpreted the law differently.
In Loper Bright, the High Court reversed this doctrine and determined that a court could question an agency’s interpretation of an ambiguous law, placing more decision-making power for interpreting ambiguous statutes largely in the hands of the judicial branch.
Agriculture is an industry that interacts constantly with statutes that are interpreted and enforced by federal agencies. Pesticide regulations, wetland determinations, PFAS limits, and crop insurance are all areas soaked with uncertainty after Loper Bright. While the regulations do not automatically change, interested parties may be more willing to challenge regulations in the wake of the Supreme Court’s decision. The potential difference between a judge and agency interpretation of an ambiguous law may create new excitement for agricultural groups (and many other industries for that matter) for an opportunity that a court might overrule what they see as undesirable agency rules. Or will Congress be more incentivized to write unambiguous laws that give agencies clear direction in every situation because of Loper Bright? We will wait and see. Both practical and substantive impacts of the Loper Bright decision are still developing, but it could reduce agency authority to some extent.
To learn more about federal agencies
If you are interested, here are additional educational resources on the topics discussed in this post:
Tags: principles of government, agencies, rulemaking, regulations, federal, administrative law
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Written by Tyler Zimpfer, Law Fellow with OSU Ag & Resource Law and the National Agricultural Law Center
Welcome back to our blog series on “Principles of Government,” where we explain key legal doctrines shaping the current public discourse. In this blog post, we’ll cover an action that’s been taken by every U.S. President since our country’s founding – the Executive Order (EO). Oftentimes, EOs are the primary tool Presidents use to “hit the ground running” with their agenda and campaign promises. A President is likely to issue hundreds of EOs over the course of a term in office.
What is an EO and how does it arise?
An EO is a written document signed by the President, typically directed to government officials in the executive branch. A President uses an EO to manage government operations and carry out laws consistent with the President’s policies and wishes. The President can also modify or revoke EOs issued by previous administrations. An EO has the force and effect of law if it is founded on authority given to the President by the Constitution or by statute.
Most of us see the President sign an EO in the Oval Office or hear about it in the media, but the process to write and approve the actual text of the EO is more complex than the signature event indicates. While there are few enforceable EO guidelines, there is a process a President follows to create an EO. Ironically, the process for Eos was established in an EO signed by President John F. Kennedy.
The EO procedure begins with the President who, with assistance of staff, drafts an EO. The President sends the EO to the Office of Management and Budget (OMB) with the explanation of the authority, purpose, and potential effect of the proposed actions in the EO. The OMB can refine the EO and coordinate comments from federal agencies. Once the OMB approves it, the EO goes to the Attorney General who reviews whether the order complies with the Constitution and any related laws. The Attorney General then sends an EO to the Office of the Federal Register. Like a high school English teacher, the Federal Register reviews for any grammar or typing errors. The EO then goes back to the President to be formally signed. Despite this choreography, the President can still sign an EO if anyone in the review process doesn’t approve of the EO. Just like regulations issued by an agency, EOs are numbered and published in the Federal Register, the federal government’s official publication of actions taken each day.
While EOs receive the most media attention, Presidents can also act in other ways to manage the operations of the executive branch, such as through executive memoranda and proclamations. Executive memoranda are similar to EOs but have less stringent requirements. The President is not required to explain legal authority or budgetary impacts of a memorandum. Proclamations are less formal and communicate information on holidays, special observances, trade, and policy, but do not have the force and effect of law.
Does the EO power derive from the U.S. Constitution?
The Constitution does not directly state that the President has the power to issue EOs. The President issues EOs through the inherent authority of the executive power, authority found in Article II of the Constitution. More specifically, Section I of Article II, which states “[t]he Executive Power shall be vested in a President of the United States of America,” is viewed as giving the President the authority to issue EOs and take other executive actions. The Constitution also states in Article II that the President shall “take Care that the Laws be faithfully executed,” which some claim is both authority for and a limitation on a President’s EO powers.
Is there a limit to what a President can do with an EO?
In simple terms – yes, there are limits. A President may assert that an EO holds the “force and effect of law” or the same power as a law passed by Congress. However, Presidents must issue an EO pursuant to legal authority found either in the Constitution or through a delegation of power from Congress. Because Article II’s grant of executive power is broad and many laws are ambiguously written, a President may try to stretch the scope of an EO to the outer limits of the President’s authority. When there is a question of whether a President has exceeded its executive authority in an EO, Congress may choose to support or oppose the actions through its legislative power.
Federal courts have the ability to review the legality of an EO, the same as reviewing a law passed by Congress. Courts examine both the scope of the EO and the Constitutional provision or statute instilling authority for the order. Courts will look at the actual text of the EO, agency interpretations, and any policy and public statements made in relation to the EO. An EO may not be legally enforceable if a court determines that the President did not have the authority to issue the order.
Find the Federal Register compilation of EOs at https://www.federalregister.gov/presidential-documents/executive-orders and learn more about Executive Orders through these resources: Executive Orders: A Beginner’s Guide, Executive Orders: An Introduction, and Executive Orders and Presidential Transitions.
Tags: principles of government, executive orders, president, Constitution
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This article marks the beginning of a new series, Principles of Government, where we explore key legal concepts shaping public discourse. Our goal is to provide a clear, unbiased, and nonpolitical explanation of these issues, allowing readers to form their own opinions on the social, political, and economic impacts. As new developments arise, we will continue expanding this series to keep you informed.
Tariffs have been a widely discussed issue recently, particularly as President Trump considers implementing new or increased tariffs on imported goods. More broadly, tariffs have played a central role in U.S. trade policy for centuries, shaping economic growth, international relations, and domestic industries. While they are often used to protect American businesses from foreign competition, tariffs can also lead to higher prices for consumers and retaliatory measures from other countries.
Agriculture, in particular, has long been sensitive to tariffs. Farmers and agribusinesses rely on imported equipment, fertilizers, and other inputs, meaning tariffs can raise production costs. At the same time, American agricultural products exported abroad can be subject to retaliatory tariffs, making them more expensive and less competitive in foreign markets. Understanding how tariffs work, who pays them, and the legal authority behind their implementation is crucial for assessing their broader economic and political impact. In this article, we will break down the fundamentals of tariffs, their role in U.S. trade policy, and the source of authority to impose tariffs.
What Is a Tariff?
A tariff is a tax or duty imposed by a government on imported goods. Tariffs serve several purposes, including generating revenue for the government, protecting domestic industries from foreign competition, and sometimes serving as a tool in international trade negotiations. When a country imposes tariffs, it raises the cost of imported goods, making domestically produced alternatives more competitive. Tariffs are typically applied as a percentage of the value of the imported goods but can be a fixed amount per unit of goods.
Who Pays the Tax on a U.S. Tariff?
When the U.S. imposes a tariff on imported goods, the tax is paid by the importer of record, typically a U.S. company or individual bringing the goods into the country. The foreign exporter does not pay the tariff directly. Instead, the importer must pay the tariff before the goods clear customs. To offset this cost, the importer may either pass it on to consumers through higher prices or absorb it, reducing their profit margin.
Where Does the Tax Go?
The tariff revenue collected by U.S. Customs and Border Protection is deposited into the U.S. Treasury's general fund. This money is not earmarked for a specific program but becomes part of the government’s overall revenue, which can be used for federal spending, such as infrastructure, defense, or social programs.
Example
U.S. Flour Co. purchases wheat from Canada Wheat Co. for $1 million. The U.S. government imposes a 25% tariff on all Canadian wheat imports. As a result, U.S. Flour Co. must pay an additional $250,000 in tariff duties to U.S. Customs and Border Protection before the wheat can clear customs. This increases the total cost of the imported wheat to $1.25 million, which U.S. Flour Co. may either absorb or pass on to consumers through higher prices.
What is the Purpose of Tariffs?
The U.S. imposes tariffs for several key reasons, each serving different economic, political, and strategic objectives. These include:
1. Protecting Domestic Industries
Tariffs make imported goods more expensive, helping domestic producers compete with foreign competitors. This protection is particularly useful in industries where lower-cost imports might otherwise drive U.S. companies out of business.
2. Generating Government Revenue
Historically, tariffs were a primary source of federal revenue before the income tax was established. While less significant today, tariff revenues still contribute to the U.S. Treasury’s general fund and help finance government operations.
3. Addressing Trade Imbalances
By making imports more expensive, tariffs can reduce reliance on foreign goods and encourage domestic production. This can help address trade deficits by limiting the amount of money flowing out of the U.S. to pay for imports.
4. Retaliating Against Unfair Trade Practices
Tariffs are often used as a tool to respond to unfair trade practices, such as subsidies, dumping (selling goods below market value), or intellectual property theft by foreign nations.
5. Protecting National Security
Certain tariffs are imposed to safeguard industries critical to national security, such as steel, aluminum, and semiconductor manufacturing.
6. Strengthening Foreign Policy and Diplomacy
Tariffs can be used as a foreign policy tool to pressure other countries into trade negotiations or compliance with international agreements. They can also serve as leverage in broader geopolitical strategies.
What is the Legal Authority to Impose Tariffs?
The power to impose tariffs in the United States originates from the U.S. Constitution. Specifically, Article I, Section 8, Clause 1 grants Congress the authority "to lay and collect Taxes, Duties, Imposts and Excises." Additionally, Clause 3 of the same section, known as the Commerce Clause, gives Congress the power to "regulate Commerce with foreign Nations."
While Congress has the constitutional authority to impose tariffs, it has delegated much of this power to the executive branch through legislation. Several key laws provide the legal foundation for U.S. tariff policy:
- The Tariff Act of 1930 (Smoot-Hawley Tariff Act) – This law, originally designed to protect American industries during the Great Depression, set high tariff rates on many imported goods. Although many of its tariffs have been reduced over time, the law remains a foundation for U.S. trade policy.
- Section 232 of the Trade Expansion Act of 1962 – This law allows the President to impose tariffs on imports that threaten national security.
- The Trade Act of 1974 – This legislation provides the President with the ability to negotiate trade agreements and adjust tariffs, particularly in cases involving unfair trade practices by foreign nations.
So, while the authority to impose tariffs is exclusive to Congress in the Constitution, Congress has ceded at least some of its power to the President.
Conclusion
Tariffs play a significant role in U.S. trade policy, serving as tools for economic protection, revenue generation, and international diplomacy. While they can shield domestic industries and address unfair trade practices, they also have broader consequences, such as higher consumer prices and potential trade disputes. Understanding the legal framework behind tariffs helps clarify how and why they are implemented.
As we continue our Principles of Government series, we will explore more fundamental legal concepts that shape national and global policy, providing you with the knowledge to assess their impacts for yourself.
Tags: tariffs, principles of government
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The new presidential administration has raised the possibility of enacting tariffs, leading many to ask us how tariffs work and how they will affect agriculture. The tariff power is one of those topics that might have us reaching back to the last civics or government class we took and raising some questions. For example, what is the source of tariff authority, when can the government levy a tariff, and how does the tariff process play out?
A desire to answer such questions led us to develop a new blog series on the "Principles of Government." In this series, we endeavor to review and enhance our knowledge of our government and how it works. We'll begin the series this week with an explanation of the tariff power, then we'll tackle other topics like executive orders, administrative agency authority, and the Constitution. But first, we offer an answer from our OSU colleagues on the important question of how potential tariffs could affect agriculture. Thank you to our guest expert authors for the following article, which helps us understand how tariffs against Canada and Mexico could impact agriculture.
Authors:
Ian Sheldon, Professor and Andersons Chair of Agricultural Marketing, Trade, and Policy, Dept. of Agricultural, Environmental, and Development Economics, Ohio State University
Chris Zoller, Interim Assistant Director Agriculture & Natural Resources (ANR), Ohio State University Extension
First Trade Policy Announcement(s) by the New Administration
Both before and after the 2024 presidential election, the trade policy community has been speculating about and discussing the likely economic impact of tariffs an incoming administration might implement once in office. With the inauguration of President Trump on January 20, we now have the first view of what could be in store for US trade policy. Specifically, while new tariffs have not been imposed immediately, the President indicated the possibility that 25 percent tariffs would be applied to imports from Canada and Mexico as of February 1 (Reuters, January 20, 2025). Surprisingly, the much talked of hike in tariffs to 60 percent on all imports from China, and a 10 percent tariff on imports from the rest-of-the-world, have yet to be announced, the President instead ordering the Office of the US Trade Representative (USTR) to investigate unfair trading practices globally, and whether China complied with the US-China Phase 1 Trade Agreement signed in 2020 (Bloomberg, January 20, 2025).
Potential Impact of Tariffs on US Agricultural Sector
With the integrated agricultural market that has evolved under the North American Free Trade Agreement (NAFTA), and its renegotiated successor the US-Mexico-Canada-Agreement (USMCA), it should come as no surprise that Mexico and Canada are the top-two US agricultural export markets at $29.9 and $29.2 billion respectively (USDA/FAS, Outlook for US Agricultural Trade, November 2024). Given the importance of these two markets to US farmers, and also in light of the declining US share of China’s imports of feed grains and soybeans (Glauber, IFPRI, December 2024), a trade war between USMCA members has the potential to have a serious impact on future US farm incomes. However, any analysis of the impact of such tariffs is an exercise in economic forecasting, and will also depend on the extent to which Mexico and Canada choose to retaliate, although Canada has already indicated it will respond in kind (Associated Press, January 20, 2026).
Agricultural economists at North Dakota State University have recently analyzed various US tariff scenarios (Steinbach et al., farmdoc, and Food Policy, 2024), which they have updated to include the impact of 25 percent tariffs against Canada and Mexico (Steinbach et al., CAPTS, 2024). Their analysis focuses on the potential export market losses in 2025 for 11 agricultural commodities, using baseline export projections for 2025 from the World Agricultural Board’s (WAOB) demand and supply estimates (WAOB, 2024). The sensitivity of US agricultural exports to the imposition of foreign tariffs is based on published estimates from the 2018/19 trade wear (Grant et al., Applied Economic Perspectives and Policy, 2021).
In the following table, three scenarios are reported for five commodities: soybeans, corn, dairy products, beef and beef products, and pork and pork products, along with total projected losses for the US agricultural sector. Scenario 1 assumes 25 percent US tariffs on Canadian imports are met with 25 percent Canadian tariffs on US imports; Scenario 2 assumes 25 percent US tariffs on Mexican imports are met with 25 percent Mexican tariffs on US imports; and Scenario 3 combines Scenarios 1 and 3 with tit-for-tat additional US/Chinese tariffs of 10 percent. The latter scenario is included here given President Trump has also signaled he will introduce an additional 10 percent tariff on imports from China as of February 1 (Guardian, January 22, 2025).
Source: Steinbach et al., 2024
While the total forecast losses to the agricultural sector are quite similar for Canada and Mexico, there is clear variation across key commodities, and forecast losses for the listed commodities are also higher for US/Mexican tariffs as compared to US/Canadian tariffs. Importantly, these forecast losses increase if additional 10 percent tariffs are levied on Chinese imports, and subsequently matched by China.
While not reported in the table, if the United States were also to levy 60 percent tariffs on all Chinese imports, and 10 percent tariffs on all imports from the rest of the world, with tit-for-tat retaliation, the total value of US agricultural exports for 2025 are forecast to decline 34.4 percent, i.e., a loss of $60.6 billion. In this scenario, US soybeans would be the most vulnerable, followed by wheat and corn. At the state level, Ohio agriculture is forecast to lose -$705 million in export value in 2025 if the most extreme scenario plays out, with a loss of -$359 million for soybean exports.
Although these expected losses are obviously subject to forecast error, at a time when commodity prices have been falling, additional uncertainty about export markets due to changing US trade policy will likely exacerbate any financial stress faced by US farmers. It will also place additional pressure on the federal government to consider ways of reducing sectoral stress through further ad hoc payments to farmers similar to the Market Facilitation Program (MFP) applied during the 2018/19 trade war.
Financial planning is always a critical component of operating a farm business, and the potential negative impacts of tariffs reinforce the need to analyze costs, evaluate alternatives, and develop plans. For assistance, please contact your Extension Educator and enroll in the OSU Extension Farm Business Analysis and Benchmarking Program (https://farmprofitability.osu.edu/). Enrolling in this program will provide you an in-depth analysis of your farm business and allow you to plan for future success.
In our next post on the Ohio Ag Law Blog, we'll explain the tariff power when we kick off our new Principles of Government series.
Tags: tariffs, principles of government, canada, mexico, agricultural economics
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