Why Trump's tariff lawsuits may not slow his larger trade war

Yahoo

6 days ago

A courtroom showdown over President Trump's tariffs is coming at the end of July, just one day before a series of steep duties are scheduled to take effect for dozens of countries around the world.
But it could still take a lot longer to permanently settle the legal question of whether the president has authority to impose his wide-ranging tariffs, according to legal experts and even a participant in the current case.
"If we win," the Trump administration 'could try to use other statutes' to justify new tariffs, said Ilya Somin, a lawyer for the small business importers that successfully challenged Trump's tariffs before a lower court in May.
'And that would be a lengthy, complex discussion about what [the president] can do,' added Somin, a law professor at George Mason University and constitutional studies chair at the Cato Institute.
The small business importers that proved it was possible to temporarily derail Trump's global tariffs with a lower court victory in May will make their arguments again on July 31 before the US Court of Appeals for the Federal Circuit in Washington, D.C.
In a separate challenge, two toy manufacturers are scheduled to make their own arguments against Trump's tariffs before the DC Circuit Court of Appeals on Sept. 30, after also winning a lower court victory.
These legal challenges to Trump's escalating trade war don't necessarily pose an immediate danger to Trump's broader tariff plans for a few reasons, according to legal and trade experts.
One, even if he loses the current cases on appeal, Trump could turn to other statutes that administration officials believe allow him to also act unilaterally. Any lawsuits designed to stop those moves would likely stretch for months into 2026.
Another complicating factor for challengers is that the Supreme Court has made it more difficult for lower courts to issue a nationwide injunction against a presidential action. It did so in a ruling last month in a case stemming from a Trump executive order ending a longstanding US rule on birthright citizenship.
The court's decision could be relevant for the tariff cases, since in May the small business importers were able to convince the US Court of International Trade to issue a nationwide injunction against Trump's tariffs after concluding he lacked authority to impose his duties by executive order under the International Economic Emergency Powers Act (IEEPA).
The US Court of Appeals for the Federal Circuit put that order on hold while it considers whether the president has the ultimate legal authority to impose the IEEPA duties, which are now scheduled to take effect on Aug. 1 unless countries are able to negotiate new deals in the coming weeks.
'I think trading partners should take the message and probably do take the message that they can't rely on the courts to protect them from tariff actions from the United States,' said Greta Peisch, an international trade attorney and former general counsel for the Office of the United States Trade Representative (USTR).
She and other trade experts say the matter is likely to be taken up by the Supreme Court, though not necessarily on an expedited basis.
Peisch also noted the two cases now before appeals courts won't address the president's authority under other statutes that carve out exceptions to Congress' tariff power.
These alternative statutes include Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on a foreign nation so long as the US Trade Representative finds the nation has violated trade agreements or engaged in unfair trade practices.
They also include Section 232 of the Trade Expansion Act of 1962, which empowers the president to impose tariffs on certain imports designated as a threat to the US economy, and Section 338 of the Tariff Act of 1930 that empowers the president to impose tariffs on countries that unreasonably restrict US goods.
There are a lot of questions about how those other laws may work, Peisch said, because some haven't been challenged in court.
'I think what that means for negotiating partners and for importers, is that the outcome of the case and the timing is not something that they can certainly hang their hat on and depend on as something that's going to change the dynamics and the calculus in the next months, maybe even year,' she said.
One loophole that the Supreme Court left in place that could work against Trump is that it has kept intact the ability of plaintiffs to seek a widespread block of presidential executive orders through class action lawsuits.
The lawyer working with the importers that are challenging Trump's tariffs, Somin, said 'we believe we don't need, necessarily, a class action to get a broad remedy here.' A complete remedy, Somin added, 'requires a broad injunction barring these IEEPA tariffs entirely.'
Somin also noted that if the president does turn to other statutes to impose tariffs, they could be more limited than the widespread duties justified under IEEPA.
'What I do not think you can do is start a gargantuan trade war with the entire world, which is what he has tried to use IEEPA to do,' Somin said.
Ben Werschkul contributed to this article.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
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