The Import-Export Clause

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

—Joseph Bishop-Henchman

Introduction

The Import-Export Clause is a detailed and stringent prohibition on state taxation of trade and was debated extensively at the Constitutional Convention. However, it is invoked only rarely in constitutional litigation. One reason is that the U.S. Supreme Court has concluded that the clause’s term “imports or exports” covers only foreign trade, not state-to-state trade. Another reason is a series of court decisions concluding that the clause does not absolutely ban state taxes on trade and prohibits such taxes only in certain circumstances.

History Before 1787

In the 1780s, states taxed neighboring states and engaged in interstate trade wars. The Articles of Confederation prohibited states from “lay[ing] any imposts [taxes on imports] or duties [taxes on exports or trade generally]” that conflicted with existing foreign treaties, but the prohibition was weak.¹ The Articles neither prohibited trade wars nor empowered Congress to stop them. States with ports taxed commerce bound for interior states, tariff wars proliferated, and the national economy was imperiled.

New York, for example, imposed certain fees on all vessels that were heading to or departing from New Jersey and Connecticut.² Benjamin Franklin described New Jersey as “a barrel tapped at both ends” between Philadelphia and New York.³ New Jersey retaliated against the New York law by imposing a tax on a lighthouse that New York City had purchased in New Jersey.⁴ James Madison described North Carolina, which was wedged between Virginia and South Carolina, as “a patient bleeding at both Arms.”⁵ Rhode Island profited so much from taxing imports bound for other states that it refused to attend the Constitutional Convention because of a correct fear that this power would be curtailed.⁶ Fisher Ames, who served in the Massachusetts convention, warned, “Our discontents were fermenting into civil war.”⁷ The Import-Export Clause would serve as “[t]he proposed remedy for this exploitation of the inland states by the seaboard states.”⁸

The Constitutional Convention

In modern times, the Commerce Clause is viewed as more significant than the Import-Export Clause, but “their roles were reversed at the Philadelphia Convention.”⁹

The Import-Export Clause’s comprehensive language resulted from numerous debates and votes over several days. The first draft prohibited the states from “lay[ing] imposts or duties on imports” without the consent of Congress. Madison attempted to transform this provision into an absolute ban but was unsuccessful.¹⁰

George Mason of Virginia objected to the clause generally on the grounds that it would limit states from using protective tariffs to encourage specific industries.¹¹ Madison responded that protective tariffs would be imposed not just on foreign imports, but also on imports from other states and that the lack of this provision “would revive all the mischiefs experienced from the want of a Genl. Government over commerce” under the Articles of Confederation.¹² The Import-Export clause was subsequently amended to prohibit states from taxing exports as well as imports.¹³ The Federal Export Taxation Clause also prohibits Congress from laying taxes or duties on exports from any state.¹⁴ (See Essay No. 72.) Roger Sherman of Connecticut added the provision that any state collections on imports or exports in violation of the clause would revert to Congress.¹⁵

Mason successfully pressed to add the carveout for inspection fees, proposing that states be permitted to collect “the usual duties on produce . . . for the sole purpose” of “inspecting, packing, storing, and indemnifying losses.”¹⁶ Madison agreed, but with the proviso that any cases of abuse be “subject to the revision and controul of Congress”—a rare congressional power to rewrite, not merely override, state law.¹⁷ On the last working day of the Convention, the Committee of Style made two modifications. First, the states could collect imposts and duties “for executing its Inspection laws,” but only when it was “absolutely necessary.” Six clauses in the Constitution used the word “necessary,” but only the Import-Export Clause used the phrase “absolutely necessary.” (See Essay Nos. 38, 66, 94, 111, and 148.) Second, the committee clarified Sherman’s language to specify that “net Produce” (any state collections in excess of the cost of inspections) would be deposited into the U.S. Treasury.¹⁸ After a last attempt by Mason to remove the provision that gave Congress the power of “Revision and Controul” over state laws, the final version of the clause was adopted over Virginia’s objection.¹⁹

The Ratification Debates

In Federalist No. 32, Alexander Hamilton argued that the Constitution would give the federal government exclusive power over the states in only limited ways. He listed three examples, including the Import-Export Clause. The other two were a uniform rule of nationalization and exclusive legislation over what became the District of Columbia. Anti-Federalist opponents of ratification worried about restrictions on state taxing powers. Cincinnatus warned that transferring tariff power from states to the general government would result in more tariffs and a heavier tax burden.²⁰ Brutus predicted that states would rely on direct taxation if they were not able to tax imports.²¹

At the Virginia convention, George Mason continued his criticism of the Import-Export Clause, arguing that Virginia would lose easy revenue from taxes on imports and exports. Madison replied, as he did at the Federal Convention, that the danger of states heavily taxing each other required a centralized solution by the national government.²²

Early Practice

In March 1789, when the new federal government assembled, Rhode Island still had not yet ratified the Constitution. Rhode Island, which was “nominally independent,” sought to impose tariffs on imports from other states.²³ In July 1789, Congress adopted a national tariff law, and threatened to enact duties on all Rhode Island exports to the rest of the Union, or even to embargo all trade. Rhode Island ratified the Constitution in May 1790, and the threatened trade war was dropped.²⁴

Congress ultimately proved deferential to state inspection laws: The First Congress enacted legislation requiring all vessels to comply with state inspection laws and directing federal customs officials to enforce it.²⁵ Congress did not modify state laws or claim revenue from excessive state enactments. In doing so, Congress “arguably . . . delegate[d] to state legislatures the power that the Constitution had conferred on Congress.”²⁶

Judicial Precedent

The first important Supreme Court case concerning the Import-Export Clause was Brown v. Maryland (1827).²⁷ Maryland imposed a $50 license on all importers selling goods in the state, regardless of the quantity or value of goods sold. Maryland argued that the tax was not on importing but on the selling of goods. Chief Justice Marshall rejected that argument and declared the tax unconstitutional. He concluded that “Imposts or Duties” meant any tax on imports or exports and that “a tax on the occupation of an importer is in like manner a tax on importation.”²⁸ Marshall evidently believed that the Import-Export Clause applied to both foreign and interstate trade. At the end of his opinion, he observed that “the principles laid down in this case . . . apply equally to importations from a sister state.”²⁹ That principle is not obvious from the text of the clause, but Marshall’s observation is consistent with the position that Madison advanced at the Federal Convention and the Virginia ratifying convention.

In Almy v. California (1860), Chief Justice Roger B. Taney took these conclusions as obvious.³⁰ He declared unconstitutional California’s stamp tax on paperwork facilitating the export of gold to New York.³¹ Canton R. Co. v. Rogan (1951), however, held that a state could impose a broadly applicable business tax on a marine terminal that is not imposed on the goods shipped through that terminal.³² Courts have generally deferred to Congress or state legislatures to address the excessiveness of inspection fees.³³

The Framers may well have expected the Import-Export Clause to be far more impactful than the Commerce Clause, but two key Supreme Court decisions have significantly reduced the clause’s protections. The first, Woodruff v. Parham (1868), upheld a tax on goods sold in Mobile, Alabama, but brought in from other states. The Court held that the clause applies only to foreign commerce. The Court repudiated Marshall’s “casual remark” in Brown, and held that the words “export,” “import,” and “impost” in the clause were used exclusively to describe trade with foreign countries.³⁴

Woodruff has been questioned but has not been overruled. Professor William Crosskey has identified several examples of the word “import” being used in the context of interstate trade.³⁵ Justice Clarence Thomas criticized Woodruff for being “selective in its use of history” and urged the Court to “restor[e] the original Import-Export Clause check on discriminatory state taxation” in lieu of the Dormant Commerce Clause.³⁶ To date, the Court has not done so.

The second key decision, Michelin Tire Corp. v. Wages (1976), adopted a new, more lenient framework for the Import-Export Clause.³⁷ Justice William Brennan’s majority opinion upheld the imposition of Georgia’s inventory tax on imported tires. The Court overruled an earlier case holding that imported goods are exempt from tax until removed from their “original package” or “broke bulk.”³⁸ Based on the constitutional history and Chief Justice Marshall’s opinion in Brown, the Court held that a state tax is invalid only if it prevents the federal government from speaking with one voice in foreign relations, diverts import revenue from the federal government, or disturbs interstate harmony by taxing goods merely flowing through to other states.³⁹

The Court acknowledged that this new interpretive framework allowed for nondiscriminatory state taxes on imports or exports that “increase the cost of goods purchased by ‘inland’ consumers.”⁴⁰ As a result, the test would seemingly be at odds with the clause’s text. Justice Brennan defended the decision by citing Professor William Crosskey, observing that “imposts or duties” are narrower terms than “tax” and that modern transportation makes imposts or duties easier to avoid.⁴¹

The Michelin Tire framework has also been applied to exports. The Court upheld a Washington state business tax on loading and unloading cargo ships where the tax did not prevent the federal government from speaking with one voice or disturb interstate harmony.⁴² The Court also upheld Tennessee’s tax on revenue from leases from international cargo containers because the tax was not levied “on the containers themselves or on the goods being imported in those containers.”⁴³

Open Questions

• When is an import no longer an import? For example, does an import lose its status when shipping containers are transferred from a ship to a train for movement to other states? Or to storage within the state? What if some packages in the shipping container are used?
• Does the Import-Export Clause prohibit all taxation of imports and exports or only imposts and duties? What is the difference?
• Is Michelin Tire Corp. v. Wages an originalist decision? Should it be overruled?
• Michelin Tire dealt with generally applicable taxes on imports, but courts have not extended its reasoning to taxes on exports. State power to tax goods “entering the export stream” is therefore very restricted.⁴⁴ Does this make sense?
• Does modern transportation mean the Import-Export Clause matters less today than it did at the Founding?
• Is Justice Thomas right in thinking Woodruff v. Parham was wrongly decided? Would the Import–Export Clause as he describes it accomplish the same results as the Dormant Commerce Clause?
• Why has the Commerce Clause mattered more than the Import-Export Clause? Does it matter whether the Framers expected the reverse to be true?

1. Articles of Confederation, art. VI, § 3; Robert G. Natelson, What the Constitution Means by “Duties, Imposts, and Excises”—and “Taxes” (Direct or Otherwise), 66 Case W. Rsrv. L. Rev. 297, 323 (2015). ↩︎
2. Joseph Bishop-Henchman, The History of Internet Sales Taxes from 1789 to the Present Day: South Dakota v. Wayfair, 2017–18 Cato Sup. Ct. Rev. 269, 272. ↩︎
3. 3 Farrand’s 542. ↩︎
4. Bishop-Henchman, supra at 272. ↩︎
5. 3 Farrand’s 542. ↩︎
6. Id. at 546–47. ↩︎
7. Allan Nevins, The American States During and After the Revolution, 1775–1789, at 555–57 (1927). ↩︎
8. Boris I. Bittker & Brannon P. Denning, The Import–Export Clause, 68 Miss. L.J. 521, 521 (1998–99). ↩︎
9. Id. at 522. ↩︎
10. 2 Farrand’s 441. ↩︎
11. Id. ↩︎
12. Id. ↩︎
13. Id. at 442. ↩︎
14. Art. I, § 9, cl. 5. ↩︎
15. 2 Farrand’s 442–43. ↩︎
16. Id. at 588, 597 n.17, 607. ↩︎
17. Id. at 588–89, 597 n.17, 607. ↩︎
18. Id. at 624; Denning, supra at 187 n.158; McCulloch v. Maryland, 17 U.S. 316, 414–15 (1819). ↩︎
19. 2 Farrand’s 624. ↩︎
20. Storing 6.1.43. ↩︎
21. Storing 2.9.5. ↩︎
22. 3 Elliot’s 481–83. ↩︎
23. Denning, supra at 211–12 (citing Frank Greene Bates, Rhode Island and the Formation of the Union 172 (1898)). ↩︎
24. David P. Currie, The Constitution in Congress: The Federalist Period, 1789–1801, at 98–99 (1997). ↩︎
25. Id. at 63–64 (citing 1 Stat. 106 (Apr. 2, 1790)). ↩︎
26. Id. at 64. ↩︎
27. 25 U.S. (12 Wheat.) 419 (1827). ↩︎
28. Id. at 444. ↩︎
29. Id. at 449. ↩︎
30. Almy v. California, 65 U.S. 169 (1860). ↩︎
31. Id. at 173–74 (1860). ↩︎
32. 340 U.S. 511 (1951). ↩︎
33. Neilson v. Garza, 17 Fed. Cas. 1302, 1303 (C.C.E.D. Tex. 1876) (Bradley, Circuit Justice); Patapsco Guano Co. v. N.C. Bd. of Agric., 171 U.S. 345, 354 (1898); Hale v. Bimco Trading, Inc., 306 U.S. 375 (1939). ↩︎
34. Woodruff v. Parham, 75 U.S. 123, 139 (1868). ↩︎
35. 1 William Crosskey, Politics and the Constitution in the History of the United States 295–323 (1953). ↩︎
36. Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 609 (1997) (Thomas, J., dissenting). ↩︎
37. Michelin Tire Corp. v. Wages, 423 U.S. 285 (1976). ↩︎
38. Id. at 301 (overruling Low v. Austin, 80 U.S. 29 (1872)). ↩︎
39. Id. at 285; Youngstown Sheet & Tube Co. v. Bowers, 358 U.S. 534, 555–56 (1959). ↩︎
40. Michelin, 423 U.S. at 288–89. ↩︎
41. Id. ↩︎
42. Dep’t of Rev. of Wash. v. Assoc. of Wash. Stevedoring Cos., 435 U.S. 734 (1978). ↩︎
43. Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 77 (1993). ↩︎
44. Dep’t of Rev. of Wash., 435 U.S. at 752; Dulles Duty Free, LLC v. Cnty. of Loudoun, 803 S.E.2d 54, 59 (Va. 2017); Brief of Tax Law Professors in Loudoun County, Virginia v. Dulles Duty Free, LLC, 138 S.Ct. 1440 (cert. denied 2018) (No. 17-904). ↩︎