Triumphant in trade talks, Trump, his tariffs still face challenge in court

Business Standard

20 hours ago

President Donald Trump has been getting his way on trade, strong-arming the European Union, Japan and other partners to accept once unthinkably high taxes on their exports to the United States.
But his radical overhaul of American trade policy, in which he's bypassed Congress to slam big tariffs on most of the world's economies, has not gone unchallenged. He's facing at least seven lawsuits charging that he's overstepped his authority. The plaintiffs want his biggest, boldest tariffs thrown out.
And they won Round One.
In May, a three-judge panel of the US Court of International Trade, a specialised federal court in New York, ruled that Trump exceeded his powers when he declared a national emergency to plaster taxes tariffs on imports from almost every country in the world. In reaching its decision, the court combined two challenges one by five businesses and one by 12 US states into a single case.
Now it goes on to Round Two.
On Thursday, the 11 judges on the US Court of Appeals for the Federal Circuit in Washington, which typically specialises in patent law, are scheduled to hear oral arguments from the Trump administration and from the states and businesses that want his sweeping import taxes struck down.
That court earlier allowed the federal government to continue collecting Trump's tariffs as the case works its way through the judicial system.
The issues are so weighty involving the president's power to bypass Congress and impose taxes with huge economic consequences in the United States and abroad that the case is widely expected to reach the US Supreme Court, regardless of what the appeals court decides.
Trump is an unabashed fan of tariffs. He sees the import taxes as an all-purpose economic tool that can bring manufacturing back to the United States, protect American industries, raise revenue to pay for the massive tax cuts in his One Big Beautiful Bill,' pressure countries into bending to his will, even end wars.
The US Constitution gives the power to impose taxes including tariffs to Congress. But lawmakers have gradually relinquished power over trade policy to the White House. And Trump has made the most of the power vacuum, raising the average US tariff to more than 18 per cent, highest since 1934, according to the Budget Lab at Yale University.
At issue in the pending court case is Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without seeking congressional approval or conducting investigations first. Instead, he asserted the authority to declare a national emergency that justified his import taxes.
In February, he cited the illegal flow of drugs and immigrants across the US border to slap tariffs on Canada, China and Mexico. Then on April 2 Liberation Day,' Trump called it he invoked IEEPA to announce reciprocal' tariffs of up to 50 per cent on countries with which the United States ran trade deficits and a 10 per cent baseline' tariff on almost everybody else. The emergency he cited was America's long-running trade deficit.
Trump later suspended the reciprocal tariffs, but they remain a threat: They could be imposed again Friday on countries that do not pre-empt them by reaching trade agreements with the United States or that receive letters from Trump setting their tariff rates himself.
The plaintiffs argue that the emergency power laws does not authorise the use of tariffs. They also note that the trade deficit hardly meets the definition of an unusual and extraordinary' threat that would justify declaring an emergency under the law. The United States, after all, has run trade deficits in which it buys more from foreign countries than it sells them for 49 straight years and in good times and bad.
The Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEEPA.
In May, the trade court rejected the argument, ruling that Trump's Liberation Day tariffs exceed any authority granted to the President' under the emergency powers law.
The president doesn't get to use open-ended grants of authority to do what he wants,' said Reilly Stephens, senior counsel at the Liberty Justice Center, a libertarian legal group that is representing businesses suing the Trump administration over the tariffs.
In the case of the drug trafficking and immigration tariffs on Canada, China and Mexico, the trade court ruled that the levies did not meet IEEPA's requirement that they deal with' the problem they were supposed to address.
The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to US national security.
Nor does it include tariffs that Trump imposed on China in his first term and President Joe Biden kept after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries.