‘No Cap’ On Largely Unreviewable IEEPA Tariffs, Court Hears

That is as major a question as it gets, a [breathtaking] claim to power that no president has asserted in 200 years, and the consequences are staggering.”

Neal Katyal

President Donald Trump would have been well within his authority under the International Emergency Economic Powers Act (IEEPA) to block all imports to the United States to respond to spiking trade deficits, the government’s attorney told the assembled judges of the Court of Appeals for the Federal Circuit on Thursday morning.

Instead, Trump set out to “regulate importation” under IEEPA  through tariffs — duties that may be set as high as the executive branch sees fit, U.S. Department of Justice attorney Brett Shumate told the court, saying “there is no limit on the cap of the tariff in IEEPA itself” as long as the president is responding to an emergency that meets four conditions.

“ I think it's undisputed that IEEPA would clearly provide the president with authority to prohibit all imports, [to] say: ‘We're not going to allow any imports into the United States from China.’ That is an extraordinary power, and that is a power that IEEPA expressly authorizes the president to take,” Shumate said.

Oral arguments took place with less than 24 hours to go before the president’s baseline 10% duties on most imports, higher “reciprocal” tariffs on U.S. trade partners were set to take effect following a months-long reprieve to create space for dealmaking. The White House has already imposed "fentanyl tariffs" on a handful of countries deemed to be enabling opioid trafficking to the U.S.

One judge summed up the Trump administration's view of its tariff power under as “unbounded authority.” 

His characterization of the law led another judge to ask:  ”Why would the president ever rely on all of these trade statutes if he has, under IEEPA, this unbounded power?”

The statute allows the president to invoke IEEPA if 1) there is a national emergency that 2) presents an extraordinary and unusual threat and 3) emanates from outside the U.S. and 4) his action addresses the emergency.

But courts may review only some of those conditions, including whether the president’s action addresses the emergency, according to the Trump administration.

 ”If they're not reviewable, how are they limits?” Judge Leonard P. Stark asked Shumate.

“They're reviewable because the president himself is bound by law,” Shumate replied. “ The president has to report to Congress. Congress has terminated emergencies in the past, so the fact that there's no judicial review doesn't mean the president isn't bound by the law.”

But that is precisely what the Trump administration’s read of the statute means, attorney Neal Katyal argued on behalf of a cohort of companies challenging the tariffs. 

“You just heard an argument…that our federal courts are powerless, that the President can do whatever he wants whenever he wants for as long as he wants, so long as he declares an emergency. That is as major a question as it gets, a [breathtaking] claim to power that no president has asserted in 200 years, and the consequences are staggering,” Katyal began, before he was quickly cut off by Chief Circuit Judge Kimberly A. Moore.

“I can understand why you’d want to start there,” she said, eliciting laughter in the courtroom. “But that might not be the way I, for example, view my role in reviewing the four limits that Mr. Shumate mentioned.”

Since Trump’s first term — including under President Joe Biden, who pursued appeals in support of his predecessor’s expanded presidential tariff authority — the Federal Circuit has endorsed every one of the unconventional tariff actions that have come their way. 

Those include the multiple rounds of tariffs that rained down to cover $300 billion worth of Chinese imports under Section 301 of the Trade Act of 1974, expanding national security tariffs that first covered raw steel and aluminum to include derivative products well outside of the timeline laid out in section 232 of the Trade Expansion Act of 1962 and a similar move to expand solar safeguard tariffs years after the duty program was put in place. At every turn, the Supreme Court has declined to review the appeals court's decisions.

In each case the court’s rationale has been the same: Absent a “clear misconstruction” or obvious misunderstanding of the statute, the Federal Circuit must side with the president’s interpretation of the law. 

That precedent is still alive and well despite a Supreme Court ruling last year that vacated a similarly deferential standard, Shumate affirmed in another exchange with Judge Stark at the end of Thursday’s oral arguments.

Another judge’s misgivings about the idea that the legislative branch would intentionally allow the president to “throw out the tariff schedule that Congress has adopted after years of careful work,” were misplaced under the clear misconstruction standard, according to Shumate.

The companies and states challenging the reciprocal and fentanyl tariffs “have not carried their burden just to show that the president violated a specific limitation in the statute itself,” he said. “I know it may be hard to believe that the president may have this power.”