Trump's Tariff authority is tested in court as deadline on trade deals looms

Mint

4 days ago

WASHINGTON—President Trump's trade agenda is entering a pivotal two-day stretch, with the administration moving to increase tariffs on imports from several nations while a federal appeals court considers the legality of his efforts.
Trump in April outlined what he described as his 'Liberation Day" tariff regime, which included a global baseline tariff of 10% on imports from virtually all nations and steeper levies on nations the administration considers to be bad actors on trade. The 10% duties went into effect soon after the announcement, but Trump had paused the higher, so-called reciprocal tariffs until the end of this week to make room for negotiations on trade deals. The talks have intensified in the final days before the Aug. 1 deadline.
Both elements of the Liberation Day tariffs were underpinned by a 1970s law, the International Emergency Economic Powers Act. Typically, tariffs are imposed using targeted authority delegated to the president by Congress. Trump's team invoked the little-used emergency authority to impose the bulk of his wide-ranging second-term tariffs more quickly.
In May, the U.S. Court of International Trade ruled that the president had overstepped his authority, concluding that Ieepa didn't give him the power to impose sweeping tariffs that have sparked a global trade war. While a three-judge panel voided Trump's levies, the U.S. Court of Appeals for the Federal Circuit quickly paused that ruling to buy itself time to consider the case. The full court, with 11 judges participating, will hear arguments Thursday morning.
The case, which combines challenges brought by a dozen states and a group of small businesses, is on a fast-track timeline. Whichever side loses is almost sure to seek review by the Supreme Court.
The challengers have mounted a barrage of arguments, any one of which could sink Trump's efforts. Ieepa doesn't give the president power to impose tariffs at all, they say, and even if it did, they argue, it wouldn't allow the ones Trump adopted. They say that there are no extraordinary threats to the U.S. that justify invoking the law, and that his tariffs have no connection to the emergencies he claims. They also say the Constitution limits the ability of Congress to delegate any tariff authority to the president—and that no other president has ever used Ieepa the way Trump has.
The Justice Department, representing the Trump administration, says in response that Ieepa's text and legislative history gives the president power to regulate imports—including by imposing tariffs—and that his levies are valid and valuable bargaining chips to deal with real emergencies related to trade deficits and drug trafficking. The department also says the president's determination of what constitutes an emergency can't be second-guessed by the courts.
U.S. officials have weighed their options should they need to find a new legal authority to impose the president's steep tariffs, The Wall Street Journal previously reported. Meanwhile, Trump has used the threat of tariffs to notch commitments from trading partners such as Japan to invest in the U.S. The president's recent pact with the European Union followed a shift in strategy by the Europeans. EU officials in recent talks sought to contain the damage the tariffs will inflict on the bloc's companies and economy, rather than trying to negotiate them away outright.
Imports from both Japan and the EU are expected to face 15% tariffs by the end of the week unless Trump further delays implementation of the levies. Other countries face even higher tariffs, such as 25% on Indian imports and 50% on Brazilian imports.
Trump, in a social-media post Wednesday, said his Aug. 1 deadline 'stands strong, and will not be extended."
There are mysteries surrounding some of Trump's agreements. The administration has yet to release the text of some of the pacts he and his team have discussed in public. In some cases, U.S. trading partners seem to differ from the president's views of what is in the agreements.
Trump said his deal with the EU included a $600 billion investment in the U.S. European officials later said the $600 billion was based on private companies' plans for their own U.S. investments and not something the bloc controlled.
If Trump wins in court, he will gain vast new powers to impose and relax taxes at will on foreign companies and individuals with U.S. connections, according to trade-law experts.
If the administration loses, the picture for Trump's tariffs gets murky.
The president 'could do what every president before him has done," and look to Congress to approve the deals, said Jeffrey Schwab, senior counsel at the Liberty Justice Center, one of the groups suing the administration.
Trade lawyers said countries could seek to renege on their deals—potentially prompting a new, messy, international fight.
'It's unlikely that a party is going to uphold a deal" if it can argue the deal was made improperly or under duress, said Michael Lowell, a partner at Reed Smith. 'If the Supreme Court does not uphold the authority, then the strength of those deals will be significantly weakened."