Members of a federal appeals court grappled Thursday with Congress’ intent when it granted presidents sweeping emergency powers, and whether President Donald Trump's emergency declarations this year are legally justified.
A Court of International Trade panel, made up of Presidents Donald Trump, Barack Obama and Ronald Reagan appointees, ruled in a single May decision addressing two tariff challenges that the administration’s application of a 10% baseline tariff and duties on Canada, Mexico and China was illegal.
The court sided with the lawyers for a coalition of 12 states and five small businesses and rejected the notion that the International Emergency Economic Powers Act gives the president broad discretion to impose duties. The judges argued that Congress had provided other tariff powers to address trade imbalances and balance of payments issues in a non-emergency setting.
The Trump administration appealed the decision to the U.S. Court of Appeals for the Federal Circuit, which stayed the CIT ruling and allowed the administration to maintain its tariffs while the case played out. On Thursday, both sides made their cases to the appeals court in oral arguments.
Brett Shumate, assistant attorney general in the Justice Department’s civil division, argued that language in IEEPA that allows the president to “regulate” importation in response to an emergency justifies Trump’s use of the statute to impose tariffs.
He also argued that Congress clearly intended to grant the president the power to wield tariffs in an emergency. IEEPA was signed into law just two years after courts upheld President Richard Nixon’s use of emergency powers to impose tariffs in a case known as U.S. v. Yoshida Int'l.
Nixon used a precursor law to IEEPA, called the Trading with the Enemy Act, to adopt the duties, but the law included identical language around the regulation of importation.
Multiple judges on the eleven-judge panel questioned Shumate on why, if Congress had intended to grant the president tariff powers under IEEPA, the statute does not specifically mention tariffs.
Obama appointee Jimmie Reyna pointed out that in other instances when Congress has given the president tariff powers, it has explicitly mentioned tariffs or duties in the statute. The major questions doctrine also dictates that government agencies and departments must have clear authorization from Congress when handling issues of significant economic and political consequence.
Congress “didn't need to specifically use the word tariffs, because it was writing that law two years after Yoshida had recognized that the phrase ‘regulate importation’ authorized tariffs,” Shumate replied.
Even if Yoshida provides legal precedent, some judges were skeptical that the decision, which came from the Court of Customs and Patent Appeals in 1975, provided legal footing for tariffs on the scale that Trump has enacted.
Judge Timothy Dyk, a Clinton-era appointee, argued that the Yoshida case explicitly said that regulating imports does not give the president the right to engage in the wholesale rewriting of tariff schedules – which, he said, is what the Trump administration has embarked on.
“I just don't see how you read Yoshida is authorizing that,” Dyk said.
But Shumate maintained that “Congress intended to provide extraordinary power to the president in an emergency.” Further, he argued that Congress’ authorization of the blocking of imports in IEEPA, which he said is a much more severe penalty, would have also meant to authorize the lesser measure of tariffs.
The lawyers for the plaintiffs in the case disagreed with that characterization of blocking imports as a higher power to tariffs.
“Absolutely not,” said Neal Katyal, head of Supreme Court and appellate practices at Milbank LLP and former acting U.S. solicitor general. Katyal, who was representing the group of small businesses in the case, argued that Congress historically has been more ready to delegate other powers, while preferring to safeguard its tariff authorities.
“The whole idea is that tariffs and taxation are always tempting for kings and for presidents, and so that's why that power was located in Congress,” Katyal said.
Katyal also took aim at the administration’s argument that the U.S. trade deficit constituted an “unusual” and “extraordinary” emergency – the threshold for deploying emergency presidential powers.
“The trade deficit has been persistent,” Katyal said. The administration, he added, is arguing that this is a "slow boil kind of emergency. … That isn't the point of what IEEPA is about.”
But multiple judges, including Obama appointee Judge Richard Taranto, pushed back on the suggestion that Trump’s IEEPA tariffs were imposed purely because of trade deficits. They cited the president’s references to the decline of U.S. manufacturing in his emergency declarations, which the administration says threatens the U.S. economy through widespread job losses.
One judge also pointed out that the growth of the agricultural trade deficit has not been as slow boiling as the plaintiffs suggest, having grown rapidly since the start of the decade.
Trump himself weighed in on his use of tariffs ahead of the hearing on Thursday morning. In a post to his Truth Social platform, the president argued that “If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE ‘DEAD.’”
During Thursday’s hearing, however, Benjamin Gutman, solicitor general at the Oregon Department of Justice, who was representing the 12 states in the case, argued that another statute – Section 122 of the Trade Act of 1974 – is the primary tool Congress provided the president to address trade deficits and balance of payments issues. Under that statute, the president can impose tariffs of up to 15% for up to 150 days.
Following the hearing, Katyal told reporters that he was "heartened by the really intense questioning that the court gave both sides." He said he was particularly pleased that the judges pressed the DOJ on their argument's logical extension that if IEEPA granted broad tariff authorities for any emergency, a hypothetical future Democratic president could declare a climate emergency and and impose steep tariffs on goods from oil-producing nations.
Former General Counsel for the Office of the United States Trade Representative Greta Peisch told Agri-Pulse after the hearing that she was also struck by how hard the judges scrutinized the administration's arguments.
"We saw that the judges really pressed the government pretty hard on their rationale and the expanse of the authority that they're asserting for the president," Peisch said. "That was kind of the overall tenor."
The case now rests with the federal circuit judges, who can take several months to issue a decision following oral arguments, depending on the case. But Peisch said that given the administration's continued use of IEEPA, including to implement new tariffs on Brazil, the court could be motivated to issue a swift decision.
Even if the appeals court sides with the plaintiffs, it may not lead to the immediate overturning of the tariffs. Either side could petition the Supreme Court to take up the case following the decision, and either the Supreme Court or the appeals court could issue another order to leave the tariffs in place while the litigation plays out.
"What really matters is what the Supreme Court ultimately says," Peisch said. "I think that that is where this fight is really going to come home."
Another lawsuit at the Court of International Trade challenging the legality of the president’s tariffs remains paused while the court of appeals considers this consolidated case.
For more news, go to Agri-Pulse.com.
