Thoughts on the Oral Argument in the Oregon Case Against Trump's IEEPA Tariffs

Like that in the similar case filed by Liberty Justice Center and myself, this one indicated judicial skepticism of Trump's claims to virtually unlimited power to impose tariffs.

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On May 21, The US Court of International Trade (CIT) held oral arguments in Oregon v. Trump, a case challenging Trump's massive IEEPA tariffs filed by twelve states led by the state of Oregon. The Oregon case is similar to that filed by the Liberty Justice Center and myself on behalf of five US businesses harmed by the tariffs, though there are some distinctions (see here for a more detailed discussion).

I won't try to go over the entire two hour argument here. Interested readers can listen to the audio available at the CIT website. And, as always, it is difficult to predict judicial decisions based purely on oral arguments. But I will say that, as in the argument in our case on May 13, the judges seemed highly skeptical of the government's claim that the International Emergency Economic Powers Act of 1977  (IEEPA) gives the president virtually unlimited power to impose tariffs.  Judge Restani repeatedly noted that the government's position would allow the president to declare an "emergency" for any "crazy" reason, and then impose whatever tariffs he wanted. In response to the government lawyer's assertion that the delegation of nearly boundless tariff authority was clear enough to satisfy the requirements of the major questions doctrine (a key issue in the case for reasons I describe here), Judge Restani said "[w]e're having a lot of argument for something that's clear" and that "It's not clear to everybody." Amen.

Unlike the argument in our case, this one included some discussion of the scope of the remedy should the plaintiffs prevail. Should there be a nationwide injunction against the tariffs, or one limited to the plaintiffs? I could easily be wrong about this. But it seemed to me the judges were leaning towards s broader remedy. The judges also asked about the standing of the states, especially those who do not directly import goods subject to the tariffs.  This issue did not come up in our case, as all our clients are businesses that directly import.

In my view, if even one state is entitled to standing (as Oregon likely is, based on their direct importation), the same goes for the rest, based on the "standing for is standing for all" rule recently applied by the Supreme Court in Biden v. Nebraska (the red state lawsuit challenging Biden's student loan forgiveness program). The Court ruled Missouri had standing, and therefore there was no need to consider whether the other state plaintiffs did.

At one point, the government's lawyer complained that an injunction against the tariffs would "kneecap the president" in his efforts to use the tariffs as leverage against our trading partners. I say the kneecapping would be a feature, not a bug. The Constitution requires a trade system based on the rule of law, not the whims of one man able to impose tariffs whenever he feels like it, in hopes that they might be useful leverage. Otherwise, consumers, investors, and businesses like our clients won't have the stable legal regime they need to make plans and function effectively. I develop these and related points in more detail in my Lawfare article, "The Constitutional Case Against Trump's Trade War," and my post on why Trump's tariffs threaten the rule of law.

While there is no set schedule for the court to issue its decisions in either our case or Oregon's, I would not be surprised if they come relatively quickly. I would also expect them to be issued at the same time, or in close succession.

Comments

[thesafesurfer]

Every time I read an article by Ilya I thank my lucky stars he has no government power.

[David Nieporent]

Well, that was a very substantive argument on your part. What in what he wrote above is wrong?

[I quit Reason in about 4 weeks]

The whole characterization of tariffs seems off.

https://imprimis.hillsdale.edu/tariffs-in-american-history/

[Roger S]

He is a Trump-hater, and he favors kneecapping him.

[Riva]

Yes, I agree the judges were highly skeptical, if you mean they were highly skeptical of the plaintiffs' arguments, which I suppose is the impetus for so many posts trying to gin up support for the "cause."

[ReaderY]

I think the constitution permits delegation of tariff authority to the President, but Congress must speak clearly when it does so. It spoke clearly in several other statutes delegating more limited and conditional tariff authority. This statute does not delegate the broad tariff authority the President claims it does with anything like the requisite clarity.

[steve sturm]

Curious: if standing was limited to the specific plaintiffs, and they won, would they get relief from tariffs on everything they purchased that was subject to Trump’s tariffs?

For example, if the staff went to eat at a Mexican restaurant, do they get a discount on the portion of their bill that represented a tariff on food imported from Mexico? If they buy a car, do they get relief, or does it depend on whether the car is for business use, or personal use by someone working at the plaintiff companies?

[I quit Reason in about 4 weeks]

The provenance of car parts or meal parts suffers from the Economics analogy to Plessy v Ferguson. A car is a great example. There are books and books of laws about what "made in America' is legally , complicated by transnational companies, and by the hundreds or thousands of parts in some products. And some parts are made of parts.

IS he black? 1/32 of his ancestors are Black so he is Black.
Is that a tariffed article ? Well maybe it was made here shipped elsewhere for finishing came back and was made part of a part that the final producer buys but does not make

[Speaking for normal people]

If you are interested in the real history of Tariffs there is the recent Hillsdale IMPRIMIS
https://imprimis.hillsdale.edu/tariffs-in-american-history/

[jb]

I think it's cute when you can tell what's going around the right wing blogosphere because you see the same points (or in this case, the exact same link) show up here.

That was actually a pretty interesting read, though. Relevant to the discussion here, though:

1) There's often an explicit acknowledgement of specific legislation enabling the relevant tariffs (e.g., the Tariff of Abominations or Compromise Tariff of 1833) making it clear that Congress was the one actually setting these tariffs. Even in cases where the legislature isn't mentioned as in the Alexander Hamilton example, although he did propose higher tariff rates, ultimately these had to be passed by Congress. So while there's a long history of broad tariffs in the US, there's no such history of Presidents using "emergency" authority to impose them.

2) If you read to the end, you'll find the following in the article:

But tariffs are a consumption tax and therefore fall hardest on the poor, who must spend all their income to buy necessities.

The result, called the Smoot-Hawley Tariff after its principal sponsors in the Senate and House, was to raise the tariff on 20,000 imported commodities. It was the highest tariff in American history.

Economists were appalled and more than a thousand signed a petition asking Hoover to veto the bill. Thomas Lamont, a senior partner at J.P. Morgan and Company, wrote: “I almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot Tariff. That Act intensified nationalism all over the world.”

Lamont was right. Foreign countries quickly built their own tariff walls to unprecedented heights and world trade collapsed. In 1929, it had amounted to about $36 billion. By 1932, global trade was only $12 billion, one-third as much. American exports had been $5.241 billion in 1929. Three years later they were down to $1.161 billion, a 78 percent drop. In constant dollar terms, American exports were lower than they had been in 1896 when the economy had been one-fifth the size.

Congress’s Smoot-Hawley Tariff, the Federal Reserve’s keeping interest rates high in order to protect the gold standard, and the Hoover administration’s attempt to balance the budget in 1932 with sharply higher taxes, were the three huge public-policy mistakes that converted an ordinary stock market crash and recession into the Great Depression.

GATT was arguably the most successful diplomatic effort in world history. As noted, in 1932, global trade had amounted to $12 billion. By 2023 it had grown to $23 trillion. In other words, global trade, in constant dollars, has multiplied more than 80 times in 80 years.

To see an example of how much this has changed the world, look at the labels on your clothes. In 1947, they would mostly have been made in Manhattan’s Garment District and in other such centers of the American clothing industry. Today they are made in such places as Bangladesh, Nicaragua, and Cambodia. These countries have a large comparative advantage in clothing manufacturing—which is labor intensive but not capital intensive—thanks to their very low semi-skilled labor costs. And while the wages of these countries are very low compared with American wages even today, they are a lot more than what these people were earning two generations ago. In 1950, according to the World Bank, 62.12 percent of the world’s population was living in extreme poverty. In 2017, the percentage had fallen to 9.18 percent.

Never in human history has poverty fallen so far so fast. No small part of that triumph has been the lowering of trade barriers, first and foremost tariffs.

I do think it's worth the fifteen minutes or so to read the whole thing. Seems like a pretty reasonable summary of the history of tariffs in the US.

[Variant]

I don't often agree with Ilya, and he too frequently lets his emotions wrt Trump cloud his judgement, but I suspect he's correct on these cases.

We saw a lot of abuse of executive power by the left during Covid (the use of obscure claws about financial optimization in govt. organizations to justify vaccine mandates, among many others), and this is no different, regardless of what you think of the policies themselves.

[I quit Reason in about 4 weeks]

Equating covid and tariffs, think I'll move on

[jb]

Pretty funny response to comment that actually calls Professor Somin out for being too emotional in his responses to some topics.

[JoeFromtheBronx]

Someone is accused of being biased as "anti-Trump," but then it's that he is for "open borders" (whoever is in power), & other times he opposes (he's right then, of course!) the actions of Democratic presidents.

[I quit Reason in about 4 weeks]

But that confuses right to emigrate with right to immigrate !!!
Open Borders is not an international right anywhere that I have ever seen

Article 13
Everyone has the right to freedom of movement and residence within the borders of each state.
Everyone has the right to leave any country, including his own, and to return to his country.

While the right to immigrate is a topic of much debate, there is no universally recognized human right to immigrate to a specific country. International law does protect the rights of migrants, refugees, and asylum seekers, but it doesn't establish a right to choose where to live or migrate. The Universal Declaration of Human Rights (UDHR) does acknowledge the rights to freedom of movement and residence within a state. However, it also recognizes the right to leave any country, including one's own, and to return to it. This implies a right to move within a country, but not necessarily to move to another.

[Lifetime Learner]

Why do you only show half of the Oregon state flag?