The Commerce Clause definition states that Congress has the ability to regulate commerce between a variety of entities. 

What is the Commerce Clause?

The Commerce Clause is outlined in Article 1, Section 8 of the United States Constitution. The purpose of this clause is to give regulatory power over commerce to Congress. Based on this clause, Congress can regulate commerce with:

  • Foreign countries
  • States in the U.S.
  • Indian tribes

Traditionally, the commerce clause has been viewed in two ways. First, it provides Congress the authority to regulate commerce. Second, it prohibits any regulations or laws at the state level that would interfere with Congressional authority. The Commerce Clause is a crucial part of the Constitution, as it defines the extent of the federal government's ability to control the country's economy. 

The application of the Commerce Clause is a frequent point of discussion in economic policy debates, as there are common disagreements about how the government should wield these powers. Typically, the powers listed in the Commerce Clause are divided into three sections:

Most discussions of how the Commerce Clause should be applied are focused on the Interstate Commerce Clause.

Generally, a person's view of the Commerce Clause is tied to their political leanings. Liberals, for example, often believe that this clause provides broad powers to the government, while conservatives believe the clause should be strictly interpreted so that the government's control of the economy will be limited.

In the Constitution, the federal government is granted some powers. However, as stated in the Tenth Amendment, any powers not specifically delegated to the federal government are granted to the states. When Congress passes laws that dictate the economic activity of states and their citizens, they will usually cite the Commerce Clause. Often, this deepens the disagreement related to how power should be balanced between the state and the federal government.

In the Constitution, commerce means commercial and business activities in every form that take place between citizens who reside in different states. This includes communications that are social in nature, including telephone calls, and people traveling between states whether it is for personal fulfillment or business.

When commerce takes place within the borders of a single state, this is known as domestic commerce. This can also be called intrastate commerce. State governments have complete control over this type of commerce. When commerce takes place between two or more states, this is referred to as interstate commerce. Extraterritorial commerce is commerce that takes place between citizens of two different countries.

The original purpose of the Commerce Clause was to eliminate conflicts between states due to one states economic advantage because of their access to a harbor. Before the Commerce Clause was instituted, it was common for states to engage in economic battles for these reasons. It is understood that the federal government has regulatory power over commerce that involves foreign countries.

Occasionally, states have attempted to negotiate commerce policy with foreign countries without involving the federal government. Every time that this has occurred, the courts have sided with the federal government over the states. States have some limited ability to apply taxes to foreign commerce, but they are not allowed to dictate policy. This power is reserved for the federal government. 

A History of the Commerce Clause

There has long been controversy about what the word "commerce" actually means. In the Constitution, there is no specific definition of the word, leading to disagreements. Some people state that the word refers to exchange or trade generally. Other people, however, insist that the founders meant for the word to apply to any interaction between citizens in different states.

Because the Constitutional definition of commerce is unclear, there is no obvious division as to what types of commerce are controlled by the government and which type the states should regulate. In an 1824 court case known as Gibbons v. Ogden, the Supreme Court made an important ruling related to the Commerce Clause. The Court stated that it was possible for the federal government to regulate intrastate commerce when it involved a larger commercial purpose.

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