Trump’s Global Tariffs Face Key Test in US Trade Court
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Trump’s Global Tariffs Face Key Test in US Trade Court
Erik Larson, Sabrina Willmer and Bob Van Voris
5 min read
(Bloomberg) -- A group of small businesses urged the US trade court to block President Donald Trump’s “Liberation Day” global tariffs during a court hearing that could have a major impact on the Republican’s economic agenda.
Lawyers for the businesses and the Trump administration on Tuesday delivered arguments before the US Court of International Trade in Manhattan, where a panel of three judges is weighing whether to issue a nationwide injunction against the tariffs, and if so for how long.
The businesses argued that Trump invoked a bogus national emergency to justify the levies, while the Justice Department said the president’s decision shouldn’t be reviewed by the courts. The panel didn’t issue a ruling, which will come later.
The fight — which could impact trillions of dollars in global trade — comes amid a wave of legal challenges to Trump’s executive orders, which are testing the limits of presidential power on everything from federal spending to restrictions on birthright citizenship.
The businesses are seeking a court order barring the US from implementing Trump’s April 2 executive order while the case proceeds. They’ve also requested an alternative ruling that could grant the businesses a final victory without a trial, and permanently block the tariffs.
At the center of the fight is Trump’s use of the International Emergency Economic Powers Act to justify the sweeping tariffs. The law grants the president authority over a variety of financial transactions during certain emergencies, typically with sanctions. Trump said he could impose tariffs under that law because the nation’s “large and persistent” annual trade deficits constituted “an unusual and extraordinary threat” to national security and the economy.
The suit alleges Trump is misusing the law. The small businesses argue the US trade deficit “is neither an emergency nor an unusual or extraordinary threat.” Even if it were, the group says, the emergency law doesn’t allow a president to impose across-the-board tariffs.
Jeffrey M. Schwab, a lawyer for the businesses from the conservative Liberty Justice Center, told the judges on Tuesday that Trump’s order represents an “unprecedented and unlawful expansion of presidential authority” that would allow Trump to impose tariffs “on any country at any rate at any time simply by declaring a national emergency, without meaningful judicial review.”
“This is not what Congress intended” when it passed IEEPA, Schwab said, adding that Trump’s fluctuating tariff rates and delays made it “very difficult” for businesses to make decisions.
The judges asked Schwab how they’re supposed to determine if something is really an emergency — a nod to the Justice Department’s argument that the courts shouldn’t question the president’s conclusions.
“We’re not asking the court to second-guess a close question of whether something is an emergency or not,” Schwab said. He said Trump’s order is “so far outside of what is considered an emergency” that the court should tell Trump “‘we have to stop you because otherwise there would be no limits to what the president could do under IEEPA.’”
Trade Deficits
Justice Department lawyer Eric Hamilton argued that Trump’s emergency declaration was justified, saying that the “cumulative effects” of annual trade deficits are a threat to the US economy and the supply chain.
Hamilton said the court didn’t have the authority to review Trump’s interpretation of an extraordinary threat. “That is a political question,” he told the panel.
Hamilton said the only legal precedent that relates to the current dispute favors the administration. In that case, former President Richard Nixon used a similar emergency law to issue tariffs during a currency devaluation crisis in the early 1970s. Hamilton also argued that Congress is signing off on Trump’s move, fulfilling its role under the law.
“Each of the boxes has been checked,” he said.
Ed Lebow, an international trade attorney with Haynes Boone who isn’t involved in the case, said injunctions are rare in such cases because plaintiffs usually fail to demonstrate they’re suffering irreparable harm.
“If you win the case, eventually you can get money back,” he said.
Trump is certain to appeal any order against his tariffs, and the US Supreme Court is likely to have the final say. The government has argued that the tariffs are justified by a legitimate emergency and that the courts don’t have authority to review Trump’s decision on the matter. The administration has asked the trade panel to dismiss the lawsuit.
Market Fluctuations
Global markets have fluctuated wildly since Trump announced the levies in a sweeping executive order an April 2. Since then, trillions of dollars in market value have been shed and regained amid weeks of delays, reversals and announcements about potential trade deals, particularly with China.
The suit is among several over Trump’s tariffs, including complaints brought by other small businesses, Democratic-led states and the Blackfeet Nation tribe in Montana.
The states, which will argue for a nationwide injunction at a hearing in the same court next week, allege the tariffs amount to a massive tax on American consumers and infringe on the authority of Congress. They’re also seeking injunctions against Trump’s executive orders issuing tariffs on Mexico and Canada, which cite the same emergency law based on claims about cartel activity and drug trafficking.
The states also allege that the broad nature of Trump’s tariffs undercut his claims about the purported emergency because they don’t target goods or services connected in any way to drug trafficking.
The Trump administration argued in court filings that the plaintiffs are improperly questioning his executive orders, “inviting judicial second-guessing of the president’s judgment.”
V.O.S. Selections v. Donald J. Trump, 25-cv-00066, US Court of International Trade (Manhattan).
