We Won Our Tariff Case!

The Court of International Trade just issued a decision striking down Trump's "Liberation Day" tariffs and other IEEPA tariffs.

The US Court of International Trade just issued a unanimous ruling in the case against Trump's "liberation day" tariffs filed by Liberty Justice Center and myself on behalf of five US businesses harmed by the tariffs. The ruling also covers the case filed by twelve states led by Oregon; they, too, have prevailed on all counts. All of Trump's tariffs adopted under the International Emergency Economic Powers Act of 1977  (IEEPA) are invalidated as beyond the scope of executive power, and their implementation blocked by a permanent injunction. In addition to striking down the "Liberation Day" tariffs challenged in our case (what the opinion refers to as the "Worldwide and Retaliatory Tariffs"), the  court also ruled against the fentanyl-related tariffs imposed on Canada, Mexico, and China (which were challenged in the Oregon case; the court calls them the "Trafficking Tariffs").  See here for the court's opinion.

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It is worth noting that the panel include judges appointed by both Republican and Democratic presidents, including one (Judge Reif) appointed by Trump, one appointed by Reagan (Judge Restani), and one by Obama (Judge Katzmann).

Here is the court's summary of its ruling, from its per curiam opinion (issued in the name of all three judges together):

The Constitution assigns Congress 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. The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 ("IEEPA") delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country he court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.

From the very beginning, I have contended that the virtually limitless nature of the authority claimed by Trump is a key reason why courts must strike down the tariffs. See, e.g., my Lawfare article, "The Constitutional Case Against Trump's Trade War." I am glad to see the CIT judges agreed with our argument on this point!

The court elaborated further on the statutory point:

Underlying the issues in this case is the notion that "the powers properly belonging to oneof the departments ought not to be directly and completely administered by either of the other departments." Federalist No. 48 (James Madison). Because of the Constitution's express allocation of the tariff power to Congress, see U.S. Const. art. I, § 8, cl. 1, 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. Two are relevant here. First, § 1702's delegation of a power to "regulate . . . importation," read in light of its legislative history and Congress's enactment of more narrow, non-emergency legislation, at the very least does not authorize the President to impose unbounded tariffs. The Worldwide and Retaliatory Tariffs lack any identifiable limits and thus fall outside the scope of § 1702.

Second, IEEPA's limited authorities may be exercised only to "deal with an unusual and extraordinary threat with respect to which a national emergency has been declared . . . and may not be exercised for any other purpose." 50 U.S.C. § 1701(b) (emphasis added). As the Trafficking Tariffs do not meet that condition, they fall outside the scope of § 1701.

It also ruled that an unlimited delegation of tariff authority would be unconstitutional:

The Constitution provides that "[a]ll legislative Powers herein granted shall be vested in a Congress of the United States." U.S. Const. art. 1, § 1. Congress is empowered "[t]o make all Laws which shall be necessary and proper for carrying into Execution" its general powers. Id. § 8, cl. 18. The Constitution thus establishes a separation of powers between the legislative and executive branches that the Framers viewed as essential to the preservation of individual liberty. See, e.g., The Federalist No. 48 (James Madison). To maintain this separation of powers, "[t]he Congress manifestly is not permitted to abdicate or to transfer to others the essential legislative unctions with which it is thus vested." Pan. Refining Co. v. Ryan, 293 U.S. 388, 421 (1935); see also Marshall Field & Co. v. Clark, 143 U.S. 649, 692 (1892).

The parties cite two doctrines—the nondelegation doctrine and the major questions
doctrine—that the judiciary has developed to ensure that the branches do not impermissibly abdicate their respective constitutionally vested powers. Under the nondelegation doctrine, Congress must "lay down by legislative act an intelligible principle to which the person or body authorized to fix such [tariff] rates is directed to conform." J.W. Hampton, Jr., 276 U.S. at 409 (1928); see also Pan. Refining, 293 U.S. at 429–30. A statute lays down an intelligible principle when it "meaningfully constrains" the President's authority. Touby v. United States, 500 U.S. 160, 166 (1991)… Under the major questions doctrine, when Congress delegates powers of "'vast economic and political significance,'" it must "speak clearly." Ala. Ass'n of Realtors v. HHS, 594 U.S. 758, 764 (2021) (quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014))….

The separation of powers is always relevant to delegations of power between the branches. Both the nondelegation and the major questions doctrines, even if not directly applied to strike down a statute as unconstitutional, provide useful tools for the court to interpret statutes so as to avoid constitutional problems. These tools indicate that an unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government. Regardless of whether the court views the President's actions through the nondelegation doctrine, through the major questions doctrine, or simply with separation of powers in mind, any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.

Nondelegation and major questions were crucial elements of our case against the tariffs, and I am happy to see they played a role in the decision.

The Court also rejected the government's claim that president has unreviewable authority to determine whether there is a "national emergency" and "unusual and extraordinary threat" justifying the invocation of IEEPA:

IEEPA requires more than just the fact of a presidential finding or declaration: "The 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." 50 U.S.C. § 1701(b) (emphasis added). This language, importantly, does not commit the question of whether IEEPA authority "deal[s] with an unusual and extraordinary threat" to the President's judgment. It does not grant IEEPA authority to the President simply when he "finds" or "determines" that an unusual and extraordinary threat exists. Cf., e.g., Silfab Solar, 892 F.3d at 1349 (collecting cases involving "statute[s] authoriz[ing] a Presidential 'determination'"); United States v. George S. Bush & Co., 310 U.S. 371, 376–77 (1940).

Section 1701 is not a symbolic festoon; it is a "meaningful[] constrain[t] [on] the
President's discretion," United States v. Dhafir, 461 F.3d 211, 216 (2d Cir. 2006) (internal
quotation marks, alteration, and citation omitted). It sets out "the happening of the contingency on which [IEEPA powers] depend," and the court will give it its due effect. The Aurora, 11 U.S. (7 Cranch) 382, 386 (1813).

The court issued a permanent injunction against implementation of the various IEEPA tariffs. That means they are blocked with respect to all importers, not just the plaintiffs in the two cases.

There is more to the court's ruling, and I will have more to say soon. But the bottom line is a major victory in the legal battle against these harmful and illegal tariffs.