In Constitutional Clash Between Trump and Courts on Tariffs, Risks Ahead for Progressive Policies

Today, the US Court of Appeals for the Federal Circuit heard oral arguments in two lawsuits brought against the Trump administration’s chaotic deployment of tariffs. While we don’t yet have a decision in the case, the patchy audio feed revealed an 11-judge panel of Bush I, Clinton, Bush II, Obama, and Biden appointees that was far from convinced by the Trump Department of Justice’s arguments. 

To some observers, these cases may seem like arcane, boring trade law in a federal court that few have heard of. To others, the lawsuits represent an opportunity to resist Trump and fight his overreach on tariff hikes that are already starting to pinch consumers’ wallets. But it’s important to step back and look at some less obvious stakes in these disputes: Namely, what kind of powers do or should presidents have in the future to deal with economic emergencies?

The Players 

These are eight lawsuits against tariffs that have been filed since “Liberation Day,” the branding term that the administration gave to its April 2 announcement of a 10 percent universal baseline tariff on practically all US imported products, as well as so-called reciprocal tariffs on top of that baseline meant to penalize countries that have trade surpluses with the United States. Also targeted in the suits are an earlier imposition of tariffs on Canada, Mexico, and China, supposedly in retaliation for insufficient action to stem fentanyl trafficking. The legal basis for all three sets of tariffs was the 1977 International Emergency Economic Powers Act (IEEPA), which allows restrictions on cross-border commerce pursuant to presidential declarations of peacetime national emergencies.  

The plaintiffs are diverse, and include a “woman-owned and -led” importer of Chinese paper products represented by a libertarian Charles Koch–funded legal group dedicated to “cutting the Administrative State down to size;” a group of businesses that import wines, plastic resins, and musical instruments represented by another libertarian legal group that has led attacks on labor unions and gun safety measures; 12 US states arguing that the import fee gyrations made it more difficult to budget for items like cryogenic detecting systems and traffic video surveillance equipment for public universities and agencies; California Governor Gavin Newsom arguing in a go-it-alone case that the Golden State’s almond exports and ports would be harmed; the owner of Spike the Fine Motor Hedgehog and other educational children’s toys; a Montana state senator and rancher from the Blackfeet Nation alleging the tariffs violate Native Americans’ commercial rights under US tribal treaties; the importer of an enormous amount of Brazilian orange juice sold in the US; and a self-represented Green Bay, Wisconsin, pensioner claiming he and his wife will have to pay more for goods and asking for courts to deem as unconstitutional almost the entirety of US trade law. (The pensioner has since lost his case for lack of standing.)

These cases are being heard in a variety of courts, and have somewhat varying legal claims.  On May 28, the Court of International Trade (CIT)—a unique subject-matter-specific federal court—ruled in favor of the second and third groups of plaintiffs (the importers business group and the coalition of 12 US states) in consolidated cases called V.O.S. Selections, Inc. et al. v. Trump and State of Oregon et al. v. Trump. A day later, a judge in the US District Court for DC sided with the plaintiff in Learning Resources et al. v. Trump, the case brought by the maker of children’s toys. Today’s oral arguments were for an appeal of the V.O.S. and Oregon cases, and are the focus of the remainder of my discussion.

What Courts Have Decided Thus Far

The CIT’s panel of three judges—appointed by Reagan, Obama, and Trump himself—made a few key findings in their May 28 ruling. First, they determined that IEEPA doesn’t allow presidents to impose the baseline and reciprocal tariffs. Second, they determined that IEEPA could be used to address situations like fentanyl trafficking, but that the application of tariffs on legal trade did not have enough of a clear relationship to stemming illegal trade. 

That the court ruled against the president so definitvely on both questions is somewhat surprising. Courts tend to tread lightly when second-guessing a commander in chief’s decisions on foreign policy—a topic that judges are ill-equipped and ill-trained to opine on. Whether one thinks Trump’s foreign policy is wise or not, it is indisputable that his tariff threats are at the core of his international agenda, and here was a three-judge panel unanimously derailing it. 

In these cases, there was a legal precedent that would have given the CIT an easy out, had they wanted it. In 1971, the Nixon administration imposed 10 percent baseline tariffs (sound familiar?) to deal with the fallout from the end of postwar currency arrangements. In Yoshida v. US, an importer of Japanese zippers claimed that the Nixon tariffs exceeded authority delegated by Congress under the 1917 Trading with the Enemy Act (TWEA, IEEPA’s nearly identical predecessor authority). The Court of Customs and Patent Appeals (now the US Court of Appeals for the Federal Circuit, where today’s hearings took place) ruled that the delegation of TWEA authority was expansive: “We do not find it surprising that Congress did not specify that the President could use a surcharge in a national emergency. Having left the battlefield, it would hardly do to dictate all the weapons to be used in the fight.” The court further noted that tariffs were more convenient and easy to use and remove than other tools, and that they should be seen as constitutional, as “no one has a vested right to trade with foreign nations.” Trump’s DOJ echoed this in their appeal, arguing that any authority that allows a full embargo on trade should be read as also allowing the lesser restriction of a tariff.

To be fair, the plaintiffs in this case wanted the CIT to go even further and essentially rule that tariffs can never be used under IEEPA, that longstanding trade deficits can’t even constitute emergencies, and that IEEPA should be found unconstitutional under anti–New Deal legal canons like the nondelegation and major questions doctrines. The CIT opted for the simpler resolution that, while IEEPA might allow tariffs, it doesn’t allow these tariffs (calling the latter “unlimited”), and that another law—Section 122 of the Trade Act of 1974—has an authority that is better suited to addressing balance-of-payments deficits. 

This approach was a small win for judicial modesty in the face of maximalist libertarian arguments. But it is somewhat incoherent. After all, Trump’s tariffs aren’t strictly speaking unlimited. In some cases, they were in amounts and in circumstances that courts had blessed before. In others, they were enumerated at certain slightly higher amounts. Hardly “unlimited,” again, even if unwise. As for the 1974 issue, Congress had a surefire way of having IEEPA—passed in 1977—be subordinate to the earlier law if they wanted to: write it into the statute, which they did not. Moreover, Section 122 by its own terms deals with issues of international payments and the role of the dollar in foreign exchange markets. These finance-oriented terms appear nowhere in Trump’s “Liberation Day” executive order, which instead focuses on issues like foreign countries’ suppresion of their workers’ wages and consumption, and misaligned diplomatic incentives in trade talks. All of this starts to look like a court second-guessing what national policy should be.

What Should Happen Instead

Lest any of the foregoing appear like an apology for Trump, let me be clear: Most of the Trump agenda is not good policy. He blames Canada for America’s fentanyl problem as an excuse to upend a trade deal he negotiated, even though Canada contributes almost nothing to this problem and had already committed to renegotiating that trade deal. (Just today, he appeared to link US-Canada trade relations to the latter’s recognition of Palestinian statehood—further arbitrariness.) More recently, Trump has used IEEPA to threaten 50 percent tariffs on Brazil for prosecuting former president Jair Bolsonaro over his coup attempt, even though the US has a trade surplus with Brazil and that proceeding is being handled by the independent judicial branch that the Lula administration doesn’t control. If courts are looking for a safe place to draw a line—checking Trump on cases like these but avoiding exceeding their own competence—he is providing them with that.

When it comes to whether or not Trump’s overall economic strategy is good for the country or not, that’s where Congress has a role to play. It can revoke Trump’s declarations of emergencies, defund the agencies responsible for the tariffs, and subpoena and investigate malfeasance. In short, they could end Trump’s trade wars tomorrow, if they wanted to. The fact that they won’t do that, when it’s clear that most lawmakers, most citizens, and most major economic actors are uncomfortable with it, is a sign of a deeper malaise—one (like others) that the courts cannot save us from. 

Moreover, there is reason to worry about the long-term consequences of allowing courts to decide what policy under IEEPA, trade laws, or other statutes should be. I’ve discussed how Nixon imposed baseline tariffs in 1971 under TWEA. At the time, the labor and other progressive voices wanted him to go even further and cap profits and ban the offshoring of jobs. How different the post-1970s era would have looked had they been successful. Going back further, the Franklin D. Roosevelt administration used TWEA to take the US off the gold standard, a move that paved the way for disciplining capital and boosting workers under the New Deal. Or, take a future example: What happens in 2030 when a progressive administration wants to pursue a Green New Deal, but faces sky-high interest rates and budget deficits due to Trump’s 2025 fiscal recklessness through the Big Ugly Bill? Tools like IEEPA could help the US to declare an international climate emergency and shut down fossil-intensive imports. 

In the next few weeks, we are likely to see the appeals courts make a call as to whether Trump’s trade war is lawful. Prediction: There will be no good outcome. One possibility is that the courts completely side with Trump, which will further embolden his worst excesses—leaving Congress, the people, and the markets to try to figure out how to pick up the pieces. On the other extreme, courts could side completely against him, following the pleas made by libertarian legal advocates with a deregulatory agenda far beyond the tariff wars of the day. This will possibly check Trump in the short term, but certainly limits progressive governing in the medium to long term. 

There are a range of outcomes somewhere in between that could preserve fragments of Trump’s discretion as well the policy activist legacy of the New Deal. In the outcomes that involve Trump taking anything of a loss, he may simply disregard a ruling made by a panel of 11 judges he didn’t appoint—further deepening the current constitutional crisis. Or he may shift to using other authorities—like Section 122 or other laws—that courts have blessed. However, a Trade War 2.0 under other laws may not change economic outcomes on the ground, even if it hews closer to procedures that lawyers are more comfortable with. Is that really a win?