News about tariffs in the United States has again taken center stage around the world as the U.S. Court of International Trade (CIT) ruled last week that the International Emergency Economic Powers Act (IEEPA) — on which President Donald Trump had relied to impose extraordinary tariffs on products from nearly every country in the world – does not authorize the president’s tariff orders. The Court found that some of the president’s orders exceed any authority granted to the president by the IEEPA, while others “fail because they do not deal with the threats set forth in those orders.”
This decision has received considerable attention given its potential economic impact. But there is some risk its impact may be overstated; for now, the tariffs remain place, and ultimately, the litigation may distract more than it changes the course of the president’s trade policy.
The Basics on the Tariff Litigation
Amidst the rapidly changing tariff litigation landscape, here are four topline points of relevance:
First, what tariffs did the CIT’s decision cover? The two consolidated cases before the CIT – which is the court of first instance, equivalent to a district court, for certain trade-related disputes – concerns the so-called “worldwide” tariffs the Trump administration announced on Apr. 2, and the tariffs imposed on products from Canada, Mexico, and China in connection with the president’s declaration of emergency concerning illicit drugs on Feb. 1. The president also has imposed tariffs on specific products under another statute (Section 232 of the Trade Expansion Act of 1962), and those remain in place, as do the tariffs on products from China that the administration developed during the president’s first term under Section 301 of the Trade Act of 1974. Neither of these sets of tariffs was challenged in these particular proceedings though we could see more cases related to those statutes if they are increasingly used, as explained further below. (For a comprehensive overview of the tariffs announced by the Trump administration, Chad Bown has a tracker.)
Second, where do the tariffs stand now? The government appealed the CIT’s decision to the U.S. Court of Appeals for the Federal Circuit. The next day, the Federal Circuit granted the government’s request for an immediate administrative stay while it considers a longer stay that would last the duration of the appeal. As a result, the tariffs are still in place.
Third, what about all the other tariff-related litigation? Ten different groups of plaintiffs have filed in the federal courts seeking to put a stop to some aspect of the president’s tariff actions of the last four months. Some have filed at the CIT and others have filed in courts in Montana, California, Florida, and Washington, DC. The Montana and Florida courts have transferred their cases to the CIT and the California court also concluded the lawsuit falls within the exclusive jurisdiction of the CIT. (In that suit, however, the court dismissed the case at the plaintiff’s request, setting up the opportunity for an appeal to the Ninth Circuit Court of Appeals.) The DC court, on the other hand, denied the government’s motion to transfer and also ruled in favor of the two companies that sought relief from the tariffs; that case is now on appeal as well. With that case now proceeding apart from the CIT cases, we may end up with a circuit split on some of the issues that would make Supreme Court review more likely down the road. The government is seeking to slow down the litigation in nearly all the cases for a variety of reasons that I need not rehearse here. (The Federal Circuit is not known for its speed in any event. A case concerning the Section 301 tariffs from the first Trump administration was appealed to the Federal Circuit on May 16, 2023, and the court has yet to issue its decision.)
From among the 13 pending lawsuits, two recent complaints stand out. Last month, an importer of car parts asked the CIT to reverse President Trump’s termination of the de minimis tariff exemption for low-value Chinese shipments. This lawsuit, which is before the same panel of three CIT judges as the two consolidated cases finding the president’s tariff orders to be inconsistent with the law, is also facing a motion to stay from the government. The plaintiff has argued that waiting any length of time for relief will be too late as the company risks going out of business in a matter of weeks. The de minimis exemption, which allows goods valued below $800 to enter the country duty-free, has been a controversial and important feature in U.S. trade law for many years so the court’s consideration of this facet of the president’s recent orders should be closely watched. And last week, a Las Vegas-based skincare company brought to the CIT a potential class action lawsuit seeking “repayment of illegally exacted tariffs for all goods” on behalf of “all people who paid or will pay tariffs under IEEPA imposed by the Challenged Tariff Orders.” This case is the first to purport to cover all companies and persons affected by the president’s orders.
Fourth, what will happen next with respect to the tariffs in the courts? The appeal of the CIT’s May 28 decision is the one to watch. It is likely that the Supreme Court will hear some aspect of the dispute in the coming months, although we do not yet know whether and, if so, how the issues will be narrowed before the justices get involved. Apart from the most basic matter as to whether the IEEPA authorizes the president to impose tariffs, the case poses many challenging questions, including regarding the reach of the courts into presidential decision-making in an emergency. (A full analysis of all the issues exceeds the scope of this article, but Jack Goldsmith has highlighted several of these in a recent post, and I have noted some in past articles.) In the meantime, the government will continue to seek to keep the tariffs in place as they are now.
Delayed & Different Deals?
While the issue of the president’s authority under the IEEPA makes its way through the courts, the Trump administration has announced that it is negotiating trade-related deals with dozens of countries. Whether these deals, should they be concluded, ultimately address the tariffs applicable to products from those countries remains to be seen. The administration announced progress on a potential agreement with the United Kingdom, but no deal has been reached yet. Likewise a separate “deal” with China was reported, but media accounts suggest that was an understanding about how each country would manage their retaliation against the other and not a written pact.
Trade deals, especially mini-deals such as the ones contemplated by the administration, are tricky business even apart from the moving tariff target. First, some trading partners are reluctant to enter into them because they may violate the rules of the World Trade Organization. Second, although the United States is a party to hundreds of trade mini-deals, there is no particular template (unlike with U.S. free trade agreements) so negotiators are not starting with model text that could expedite their conversations. Third, given the lack of a template, there could be a lot of flexibility, and therefore uncertainty, in what they include. Already in the U.S.-UK term sheet, one sees that the parties are expanding their discussions beyond traditional areas of free trade agreements to economic security and “commercial considerations.” Other deals could include commitments to make purchases like the so-called China Phase-One Deal did in 2020, or they could seek to mix and match from other areas like defense (think: military spending and support), or debt relief, or they may even include guarantees regarding specific transactions. In the end, these agreements may not resemble modern trade deals (mini or otherwise) hardly at all. But there are limits to this exercise, which brings me to a fourth difficulty of negotiating international agreements with any connection to foreign commerce: working with Congress.
Why Congress is Needed
By now, many readers will be able to recite Article I, Section 8 of the Constitution at least enough to know that that Article assigns to Congress power to regulate commerce with foreign nations and to impose tariffs. At the core of the tariff litigation is the question of whether Congress delegated that authority to the president in the IEEPA such that he can impose tariffs when he follows the law’s procedural requirements, and if so, whether that delegation is constitutional.
The president’s deal-making activities also prompt constitutional questions. Although the United States has entered into hundreds of trade-related deals in recent years, almost none has been approved by Congress. This approach by multiple administrations has created an obvious tension with the trade separation-of-powers. Congress asserted its authority in this space recently by approving the Biden administration’s trade deal with Taiwan after that deal had been signed, but it has done little on a broader scale. In a recent exchange with members of Congress, U.S. Trade Representative Jamieson Greer said that his office plans to negotiate and conclude the upcoming agreements as executive agreements and not seek congressional approval. Congress has the power to intervene in these negotiations, but it does not seem poised to do so, even where there is bipartisan support for such interventions.
The bottom-line takeaway from recent events is that Congress is needed in both areas: the tariff authorities and the deal-making. The litigation may delay, distract, and disrupt matters, but even if the government loses these cases at the Supreme Court, there are many other statutes that the president could use to implement like tariffs. Accordingly, the lawsuits do not meaningfully affect the president’s trade agenda. More than a dozen congressional delegations of authority, as described in my 2020 Stanford Law Review article, remain on the books that could accomplish the same results. The president need only pivot to others, such as Section 122 of the Trade Act of 1974 as the CIT pointed out, or Section 338 of the Tariff Act of 1930, or back to Section 232 and Section 301. Only Congress can close off these pathways. Similarly, one can expect the president to enter into trade-related deals without oversight from Congress unless the legislature takes up new initiatives to channel the executive branch into the types of deals that the members wish, or away from trade-related deals entirely.
The drafters of the Constitution felt strongly about congressional authority in this area. One of the earliest drafts included text stating the Congress would have “the exclusive Power of regulating Trade and levying Imposts”. And the final version is likewise clear. Congress need not eliminate the IEEPA nor bring back all tariff-related controls entirely to the Hill, but crafting trade-related legislation that directs the executive to act consistently with the bi-partisan support for carefully tailored, consistent, and reliable trade policy should be within reach.
The article has been updated on the evening of June 4 to reflect the state of the appeal in the Ninth Circuit.
