Photo: Philip Yabut/Getty Images
I’ve been putting this off for a while, but it seems that now would be a good time to write about the pending litigation regarding Trump’s use of the International Economic Emergency Powers Act (IEEPA) to impose tariffs on the world. The administration has now lost this argument twice—once in the Court of International Trade (CIT) and once in the Court of Appeals for the Federal Circuit (CAFC), and it is worth looking at those decisions and their implications. Of course, everybody knows that neither decision is the last word, since the administration has appealed to the Supreme Court. Meanwhile, the tariffs stay in effect, so nothing has really changed on the ground and will not change until the Supremes render their verdict.
The CIT decision was unanimous among the three-judge panel. The CAFC decision was 7-4, with judges appointed by presidents of both parties on each side. The decisions largely turned on whether IEEPA permits the use of tariffs in addressing an emergency, even though the word “tariffs” is not mentioned in the statute. That absence is sufficient for some people, but the main argument has been over whether other words in the statute, notably “regulate . . . importation,” encompass tariffs. Based in part on the legislative history of IEEPA, the CIT decided that Congress intended to limit presidential power, not expand it, thus confirming “that the words ‘regulate . . . importation’ have a narrower meaning than the power to impose any tariffs whatsoever.” The decision also pointed out that Congress had, prior to IEEPA, included Section 122 in the Trade Act of 1974, which explicitly gave the president limited authority to impose tariffs to deal with trade imbalances—the very emergency Trump cited.
The CAFC also determined those words were insufficient, saying, “the statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.” The CAFC further elaborated that “whenever Congress intends to delegate to the President the authority to impose tariffs, it does so explicitly, either by using unequivocal terms like tariff and duty, or via an overall structure which makes clear that Congress is referring to tariffs.”
Both courts were careful to say that they were addressing the specific tariffs targeted in the lawsuits—the trafficking tariffs related to fentanyl imposed on Canada, Mexico, and China, and the “Liberation Day” tariffs imposed on everybody else—and were not deciding that IEEPA precluded all tariffs. This was particularly evident in the CAFC decision, where the four dissenting judges concluded the statute did permit tariffs, and the president was properly exercising his authority, and four of the judges in the majority concluded that the statute did not permit any tariffs. The majority, however, agreed with the CIT that IEEPA did not permit the particular tariffs in question. The difference seems to be rooted in how expansive a view one takes of congressional intent and legislative draftsmanship. For some, words like “regulate . . . importation” were sufficient to conclude tariffs were authorized, but for the majority, they were not.
Much of the argument turned on how to interpret a previous case, known as Yoshida II, in which the predecessor court to the CAFC affirmed President Nixon’s action imposing tariffs in response to a balance of payments crisis. The government argued that the decision validated Trump’s action, but the courts noted that the tariffs addressed in Yoshida II were limited in time, scope, and amount in contrast to the Trump tariffs, which led both courts to the conclusion that while IEEPA might permit some tariffs, it did not permit these tariffs.
That reasoning allowed both courts to largely avoid the messy constitutional question of how and to what extent Congress can delegate its powers under Article I of the Constitution. The argument that Congress cannot delegate its fundamental powers, particularly on what the Supreme Court has called “major questions,” without providing clear guidance and limitations, and whether IEEPA runs afoul of that doctrine remains to be decided. I initially thought that Supreme Court justices would be more interested in tackling that issue than in further parsing Yoshida II, but I now suspect that, like the lower courts, they will take the safer route and focus on the text of IEEPA.
Finally, the appellate judges unanimously agreed on three issues: that the plaintiffs had standing to sue, that the CIT had jurisdiction, and that the CIT had to reconsider its decision to grant a universal injunction against the tariffs instead of one that only applied to the plaintiffs in the case. The last two are significant. There are a number of lawsuits pending in other courts arguing that because IEEPA does not permit tariffs, the CIT has no jurisdiction. The CAFC decision strikes a significant blow to that argument. The remand on the universal injunction issue is the result of an unrelated recent Supreme Court decision that occurred after the CIT decision that imposed new limits on when a broad injunction could be issued. That will not necessarily lead to a change in the CIT’s decision, but it will require them to review it.
A victory for the plaintiffs could mean serious constraints on executive authority and a restoration of the role of Congress in determining trade policy. What it will probably not mean is immediate tariff relief for U.S. producers and consumers, as the administration is busy preparing its plan B to maintain the tariffs if it loses the case. That will be more difficult than they think—stay tuned for a column on that—and it will certainly lead to more lawsuits, proving once again that the big winners in all this are the lawyers.
William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.
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