President Trump’s unilateral power to impose tariffs on other nations will be hotly debated before a federal appeals court on Thursday, a case that could upend the White House trade agenda and void the huge trade deals already struck.
The U.S. Court of Appeals for the Federal Circuit on Thursday will hear from administration lawyers contesting a May ruling that struck down Mr. Trump’s ability to set sweeping tariffs under the International Economic Emergency Powers Act.
The Trump team is squaring off with attorneys for Democrat-run states and the Liberty Justice Center, who say Mr. Trump is overstepping his powers and that the tariffs will harm constituents and small businesses.
“There are multiple reasons why we think the president’s tariffs are illegal or unconstitutional, and the court only really wants to agree with us on one of those in order for us to win,” said Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center.
The plaintiffs say the president is tapping into authority that rests solely with Congress.
They say the 1977 law he is using, known as IEEPA, didn’t give presidents sweeping abilities to impose tariffs, and, even if it had, Mr. Trump would be stretching the amount of trade power that Congress delegated to the executive branch.
Attorneys also said the levies would harm U.S. companies that rely on imports, so the appeals court should uphold the lower ruling by the U.S. Court of International Trade.
“The IEEPA law case is very significant,” said Wayne Winegarden, a senior fellow in economics at the Pacific Research Institute.
If the suing companies and states win, “Trump’s ability to indiscriminately impose tariffs on U.S. trading partners would be curtailed,” he said. “The tariffs that have been imposed, depending on the ruling, could be invalidated. This may unwind the trade deals that the administration has already discussed, such as those with the U.K. and Japan.”
The White House and its lawyers argue that Mr. Trump is acting well within his presidential powers when he assigns tariffs.
“Congress routinely delegates tariff authority to the president to augment his inherent powers over foreign affairs and national security, and the Supreme Court has recognized that broad delegations in that sphere are the norm, not the exception,” the administration’s lawyers wrote in a brief.
The trade court ruled in favor of the justice center and Democrat-led states in the spring. Yet the administration appealed and received a stay, meaning Mr. Trump could proceed with his tariff moves pending the appeal.
In April, Mr. Trump paused “Liberation Day” tariffs for 90 days to allow space for trade talks, but reassigned tariffs this month in nation-by-nation letters, including ones to Brazil, Canada and Mexico.
He has fired off letters to more than 20 countries, assigning a tariff rate that will be effective Friday unless the nations come forward with more favorable terms for the U.S.
The U.S. Court of Appeals for the Federal Circuit consolidated the justice center’s lawsuit with a similar suit from a dozen Democrat-run states.
The IEEPA law that Mr. Trump is relying on empowers the president to regulate international commerce in response to unusual or extraordinary foreign threats.
For instance, President George W. Bush used IEEPA to block assets of terror groups following the attacks on Sept. 11, 2001.
“It is not difficult to imagine that Congress meant for the President to use his IEEPA powers as a tool to create leverage, just as Congress and the president have long done in other international-trade contexts,” administration lawyers wrote in a brief.
The blue states and small, import-reliant firms argue Mr. Trump is fabricating emergencies to swipe tariff-setting authority that rests with Congress.
They say Mr. Trump’s decision to threaten Brazil with a whopping 50% tariff, citing in part the prosecution of Brazilian ex-leader Jair Bolsonaro, is proof of tariff power run amok.
“Recent events show he thinks he can do whatever he wants,” Mr. Schwab said.
Tariffs are taxes or duties paid by importers on the goods they bring in from foreign markets.
Mr. Trump views tariffs as a great way to force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.
Mr. Trump’s affection for the levies seems to be lifelong, and he speaks favorably about former President William McKinley, known as the “tariff king.”
The White House said it won’t budge from its Friday implementation date for new tariffs. At the same time, it is open to offers from foreign trading partners that give the U.S. side a better deal.
Mr. Trump is celebrating deals with the European Union, the U.K., Vietnam, Indonesia, the Philippines and Japan that opened their markets to U.S. products or secured investment money for U.S. projects, in exchange for a lower tariff rate on goods that flow from those countries to American markets.
Attorneys said an adverse outcome for Mr. Trump would force him to revert to prior tariff levels, find a separate statute to implement his tariffs lawfully, or run to Congress to get GOP allies to codify the tariffs.
“Obviously, if the president doesn’t have the authority to impose tariffs, any trade deals where he’s imposing tariffs couldn’t really happen,” Mr. Schwab said.
Mr. Winegarden said other countries “are absolutely mindful of this legal case.”
“I imagine they are very eager to see the outcome from this case, which is undoubtedly influencing their negotiation tactics,” he said.
In its brief, the administration told appellate judges that affirming the lower court’s decision against Mr. Trump and terminating the stay of it “would undermine [ongoing] negotiations, which could fail or produce less favorable terms where trading partners have ’reduced incentives to reach meaningful agreements.’”
At the same time, Mr. Trump says he is content to impose a high tariff on products from other nations if he cannot negotiate a deal. He says it should compel foreign companies to set up shop in America, so they avoid tariffs when they sell to the rich American consumer market.
Mr. Trump sometimes characterizes the tariffs as payments from other countries or the cost of doing business in the rich American consumer market. Foreign countries don’t pay the tariffs directly to the U.S. Treasury, however.
In many cases, U.S. companies will pay the levies, and they might pass on at least some of the cost to consumers through higher prices.
The plaintiff companies say they pay the tariffs to U.S. customs whenever they have to import goods.
The justice center’s plaintiffs are VOS Selections, a New York business that specializes in the importation and distribution of small-production wines, spirits and sake; FishUSA Inc., which sources most of its sportfishing tackle from abroad; Genova Pipe, a Utah business that makes ABS pipe using ABS resin from South Korea and Taiwan; MicroKits LLC, a Virginia business that assembles Asian electronics into educational electronic kits and musical instruments; and Terry Precision Cycling of Vermont, which makes women’s cycling apparel.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.