Recently, two federal courts ruled against the Trump administration’s imposition of tariffs under the International Emergency Economic Powers Act. While a three judge panel of the Court of International Trade assumed that the president could theoretically impose tariffs under the act, it nonetheless issued a unanimous opinion setting aside an array of tariffs President Donald Trump had imposed since his self-proclaimed Liberation Day, concluding that he had exceeded the tariff authority Congress gave him under the act.
On the heels of that decision, a federal district court judge in the District of Columbia issued an opinion ruling that the act does not authorize the president to impose tariffs.
The tariffs are just the latest Trump administration priority to receive unfavorable treatment from a trial court.
The administration has already filed an appeal of the Court of International Trade’s decision with the federal circuit, which has temporarily stayed the lower court’s ruling while it considers the government’s request for a stay pending a decision on appeal.
The question now? Whether the lower court’s opinion will be the final word on the President’s tariff authority.
Assuming, as the international trade court did, that tariffs are authorized under the International Emergency Economic Powers Act, the Trump administration has good grounds to argue that the trade court erred in holding that tariffs imposed on China, Canada, and Mexico—referred to in the opinion as the “Trafficking Tariffs”—were outside its authority. However, the administration will have a tougher time defending the broader array of tariffs—referred to in the opinion as the “Worldwide and Retaliatory Tariffs”—against its other trading partners.
The plaintiffs in the trade court case are a private business and several states with Democrat attorneys general. All of them claim that the tariffs have injured them with higher costs.
The tariffs they complain of fall into two buckets. One category is that of “Trafficking Tariffs,” imposed on China, Canada, and Mexico in response to a declared emergency arising from production and exportation of fentanyl precursor chemicals from China and the flow of fentanyl from Mexico and Canada.
The other category is “Worldwide and Retaliatory Tariffs,” imposed as response to a declared emergency arising from nonreciprocal tariff regimes and persistent trade deficits with other countries.
Certain matters are undisputed. For example, the Constitution gives Congress alone the power to impose tariffs and duties on foreign trade.
But the Trump administration does not claim an inherent executive authority to impose tariffs. Instead, it argues that when Congress enacted the International Emergency Economic Powers Act, it delegated tariff authority to the president in cases of national emergency.
Both the plaintiffs before the trade court and litigants in similar challenges have argued that the act confers no tariff authority whatsoever on the president. They argue (correctly) that the act nowhere uses the word tariff and (more doubtfully) that the tariff power cannot be inferred from the act’s grant of presidential authority to “regulate” or to “prohibit” imports.
Here, however, the Court of International Trade conceded that the act gave the president some authority to impose tariffs. In reaching this conclusion, the court bypassed one of the most popular arguments against the tariffs: the major questions doctrine.
From the moment Trump began announcing tariffs, many have argued that they are what the Supreme Court has called an issue of “vast political and economic significance.” Such major questions require clear congressional authorization before the president can claim authority to act.
Within the last few years, the major questions doctrine has downed executive actions on COVID-19 vaccine mandates, clean power plans, and eviction moratoriums. Most recently, it assisted in a takedown of President Joe Biden’s first student loan cancellation.
So, why did the court decline to employ that doctrine here? The opinion makes noises about major questions, but neglects to go through the analysis, let alone compare the case with any of the recent major questions decisions.
Why might that be?
Consider the student loan case as the nearest analogy. There, challengers to Biden’s plan to cancel $430 billion of student loans under another emergency law, the HEROES Act, argued that the law had never been used to cancel loans before and that the law’s text, which allowed the president to “waive or modify” regulations pertaining to the loans, did not plausibly vest the president with cancellation power.
On both counts, the challengers were right about the HEROES Act.
Here, by contrast, precedent exists for Trump’s actions. President Richard Nixon used the International Emergency Economic Powers Act’s predecessor, the Trading with the Enemy Act, to impose tariffs. Moreover, the text of the act itself gives the president the authority to “regulate” or “prohibit” foreign transactions, making more plausible the inference that tariffs are a lesser included power.
The court’s opinion also bypassed another popular argument against the tariffs: the nondelegation doctrine.
For present purposes, that doctrine holds that Congress cannot give away its legislative power to the executive. Such power as it does give away must be constrained by a limiting principle.
Emergency statutes like this one would seem to be ripe for nondelegation challenges because they are drawn in extraordinarily broad terms and apply in an array of settings not readily limitable or anticipated.
Yet the nondelegation doctrine, like the major questions doctrine, is “not directly applied” in the court’s opinion. Perhaps that is because the Supreme Court has not used the nondelegation to strike down an act of Congress since 1935. And while the Supreme Court is due to decide a major nondelegation case this term, for now, a ruling on that basis looks vulnerable on appeal.
Instead, the trade court decided to divide and conquer tariffs.
Beginning with the worldwide tariffs (those responding to trade imbalances), the court notes that Congress responded to Nixon’s 1974 imposition of tariffs by enacting the Trade Act, which confers on the president a more limited tariff authority to deal with trade deficits, including those deemed “large and serious.”
Given that Congress foresaw the need to counter trade deficits and dealt with it in a separate, nonemergency law, the court here reasoned that a president cannot invoke the International Emergency Economic Powers Act to avoid the Trade Act’s limits.
That part of the opinion seems to stand on relatively firm ground.
With respect to the trafficking tariffs on China, Canada, and Mexico, the court’s reasons are less compelling. None of the plaintiffs challenge that the illegal trafficking of fentanyl is an extraordinary threat. Nonetheless, the plaintiffs argue, and the court concluded, that the trafficking tariffs do not respond directly to that emergency.
Where does that limit reside?
Supposedly in the text of the International Emergency Economic Powers Act, which provides that the means a president chooses must “deal with” the declared emergency. The court muses that in the “ordinary meaning” of those words, only “a direct link between an act and the problem it purports to address” can suffice to make an emergency response lawful. For that, however, the court cites no authority apart from the judges’ own preferred construction.
It is highly improbable that Congress used the phrase “deal with” as the trade court’s opinion does—namely, to foreclose the president from using all but the most direct conceivable means of confronting a given emergency, with the judiciary having the final say over whether the means chosen were suitable to an emergency.
Already, China has promised to stem the production of fentanyl precursors, and Mexico and Canada have promised to strengthen border enforcement in response to the tariffs. This would certainly seem to strengthen the administration’s position that the trafficking tariffs were an effective way of “deal[ing] with” those national emergencies.
Of course, this whole discussion assumes that tariffs are available under the act.
Not all courts make that assumption. Just hours after the trade court’s decision, in a case filed by several small businesses that manufacture their products overseas in countries impacted by the tariffs, Judge Ruben Contreras, a federal district court judge in the District of Columbia, issued an opinion concluding that tariffs are not, in fact, authorized under the International Emergency Economic Powers Act.
Like the trade court, Contreras concluded that the Trade Act of 1974 dealt specifically with the issue of imposing tariffs to address trade imbalances, and that the applicable provision in that act “would have been pointless if Congress understood” the International Emergency Economic Powers Act “to allow the same tariffing authority.”
But Contreras went further.
He began by noting that no president before Trump “has ever purported to impose tariffs under IEEPA” and that “IEEPA does not use the words ‘tariffs’ or ‘duties,’ their synonyms, or any other similar terms like ‘customs,’ ‘taxes,’ or ‘imposts.’” He continued that in times of a declared national emergency, the act gives the president the authority to “‘investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit’ the ‘importation or exportation’ of ‘property in which any foreign country or a national thereof has any interest.’”
The only language here that could, Contreras stated, conceivably support the administration are the words “regulate … importation.” However, Contreras reasoned, “The power to regulate is not the power to tax,” and a tariff is certainly a tax.
Emphasizing the point, Contreras added: “To regulate is to establish rules governing conduct; to tariff is to raise revenue through taxes on imports or exports. … Those are not the same. … If Congress had intended to delegate to the President the power of taxing ordinary commerce from any country at any rate for virtually any reason, it would have had to say so.”
While a president could “authorize targeted economic sanctions on the person or state responsible for [an] underlying threat to U.S. national security,” he says, it can’t impose a tariff.
Contreras also noted another objection to the administration’s argument. The International Emergency Economic Powers Act provides that a president may “regulate … importation or exportation.” But while the president’s lawyers contend that this language enables him to impose tariffs in the event of a national emergency, the Constitution explicitly prohibits export taxes under Article I, Section 9, Clause 5 (“No Tax or Duty shall be laid on Articles exported from any State”).
There appears no doubt that the administration will appeal Contreras’ opinion to the D.C. Circuit. Clearly, though, this issue appears destined for the Supreme Court and, given the stakes and timing, could well upset the justices’ travel plans for the summer.