The United States Court of International Trade issued a unanimous ruling against President Trump’s worldwide tariff scheme, also known as “Liberation Day” tariffs. The Court also ruled against the fentanyl-related tariffs imposed on Canada, Mexico, and China. The Court further entered a permanent injunction against the Administration from enforcing the tariffs. The President had issued these wide-ranging tariffs under the International Emergency Economic Powers Act of 1977 (IEEPA).
The Court recognized that the Constitution places the power to set tariffs in the hands of Congress, which has the exclusive powers to “lay and collect Taxes, Duties, Imposts and Excises,” and to “regulate Commerce with foreign Nations.” U.S. Const. art. I, § 8, cls. 1, 3. Therefore, “Because of the Constitution’s express allocation of the tariff power to Congress . . . we do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers.”
The Court read the two main provisions of IEEPA to not delegate the powers the President claimed. IEEPA’s general delegation of a power to “regulate . . . importation,” the Court held, must be “read in light of its legislative history and Congress’s enactment of more narrow, non-emergency legislation.” Because the legislative history and the existence of other tariff tracks exist, that means “at the very least [IEEPA] does not authorize the President to impose unbounded tariffs” during ordinary times. That leaves the question of whether President Trump’s tariffs are in response to some emergency.
The Court of International Trade said no. The Court held that “IEEPA requires more than just the fact of a presidential finding or declaration.” The statute limits “[t]he authorities granted to the President by section 1702 of this title may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose.” The Court held that “[t]his language, importantly, does not commit the question of whether IEEPA authority ‘deal[s] with an unusual and extraordinary threat’ to the President’s judgment. That means there must be a national emergency of some meaningful sort. The U.S. has had trade deficits for decades (Census Bureau data here and our NTU analysis here), that’s hardly an emergency or anything that can be classified as “unusual” at this point. And, of course, trade deficits are actually good, as NTUF has long argued.
It is important to note that the Trump Administration wanted this case heard in the United States Court of International Trade. And the Administration got a favorable panel, including one jurist (Judge Timothy Reif) appointed by President Trump himself. The other two were a President Reagan appointee, (Judge Jane Restani), and one appointee by President Obama (Judge Gary Katzmann). The Court of International Trade is within the United States Court of Appeals for the Federal Circuit, which has favorable case law for broad readings of presidential powers. The Federal Circuit has issued a temporary stay of this ruling while the Administration considers its options.
In the meantime, Judge Rudolph Contreras of the United States District Court for the District of Columbia also held the President’s tariffs likely violated IEEPA, and issued a preliminary injunction against their continued enforcement. But this order is stayed for 14 days to allow the Administration to appeal. That injunction is more narrow, focused only on the companies that brought the challenge.
As this is a central program to President Trump’s second administration, we expect these cases to be further appealed, very possibly landing at the United States Supreme Court in short order.