Policy and Legal

The Federal Circuit Court of Appeals held oral arguments last Thursday in the leading challenge to President Trump’s International Emergency Economic Powers Act tariffs.

The background: In this consolidated case, V.O.S. Selections v. Trump and Oregon v. Trump, the question before the court is whether President Trump’s global reciprocal tariffs and fentanyl tariffs exceed his authority under IEEPA.

• The appeal follows a May decision by the Court of International Trade to enjoin the tariffs after concluding that IEEPA “does not authorize the president to impose unbounded tariffs”—a decision that the Federal Circuit put on ice pending appeal.

The arguments: The Federal Circuit argument focused on the text of IEEPA, which does not expressly mention tariffs and limits the exercise of executive power to address “extraordinary and unusual” threats.

• Although the court appeared split on whether IEEPA allows the president to impose tariffs, most of the 11-judge panel seemed unwilling to accept that IEEPA authorizes the sweeping global tariffs at issue here.

The precedent: The government’s case relied heavily on the closest relevant precedent—the 1975 decision in U.S. v. Yoshida International—which upheld President Nixon’s use of the Trading with the Enemy Act (IEEPA’s predecessor) to place a 10% ad valorem tariff on all imports after the U.S. withdrew from the gold standard.

• The judges accused the administration of “ignoring the parts of Yoshida” it doesn’t like, including the Yoshida court’s express limitations on the president’s tariff authority.
• The court in that case carefully distinguished between a time-limited tariff “as a temporary measure calculated to help meet a particular national emergency, which is quite different from imposing whatever tariff rates he deems desirable.”

What’s next: “Although it is always difficult to predict judicial outcomes, we expect a decision against the Trump administration though not unanimous,” said NAM Vice President and Deputy General Counsel Erica Klenicki.

• “Nearly two dozen amicus briefs were filed in the case, including by members of Congress, legal scholars and think tanks from across the country. Given the high stakes and novel legal questions involved, we fully expect this case to end up before the U.S. Supreme Court next term.”