How to Save the President’s Tariffs from the Courts
The legal battle over Nixon’s tariffs provides a roadmap to secure Trump’s.
By Amanda (Grandjean) Gould, who serves as Chief Counsel to Senator Bernie Moreno and previously served as counsel to the Chairman of the Federal Election Commission; and Nicholas Phillips, an international trade lawyer and writer based in Washington, D.C.
When President Trump announced his “Liberation Day” tariffs, critics of the policy feared that enforcing them would cause major disruptions in financial markets and supply chains. But supporters of the policy feared that the tariffs wouldn’t end up getting enforced at all. To levy the tariffs, the administration bypassed more traditional trade laws and instead relied on powers provided by an untested statute—the International Economic Emergency Powers Act (IEEPA)—that had never before been used for that purpose.
The White House had compelling reasons to roll the dice on IEEPA. The statute allowed Trump to act quickly and unilaterally to impose tariffs on a global scale. That created necessary leverage to force negotiations with countries that have long used industrial subsidies, non-tariff trade barriers, and other distortive policies to run persistent trade surpluses against the United States and weaken our industrial base. But our negotiating leverage is only as strong as the legal authority for our tariffs. Now that courts are expressing skepticism about IEEPA, it’s time to consider whether the White House can backstop its negotiating position and seek a stronger foundation for its signature tariff policy.
On Liberation Day, the administration issued executive orders levying 10% tariffs on every country in the world and reciprocal tariffs of up to 50% on 83 countries with whom the United States runs a trade deficit. These added to previously announced tariffs on Canada, Mexico, and China in response to their inaction on fentanyl and illegal immigration. To issue these orders, the White House relied on IEEPA’s delegation of power to the president to “regulate…importation” in order to “deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the president declares a national emergency with respect to such threat.” Importers and libertarian legal activists sued and claimed that this power did not cover Trump’s tariff actions. Among other claims, these plaintiffs argued that the power to “regulate…importation” should not be read to include a tariff power because the Constitution delegates tariff power to Congress and the administration’s use of IEEPA would defeat that delegation.
The Court of International Trade, which has exclusive jurisdiction over lawsuits arising under U.S. trade laws, agreed, enjoining Trump’s tariff orders and finding that IEEPA did not confer “unbounded authority” on the president to “impose unlimited tariffs on goods from nearly every country in the world.” Although it stopped short of finding that IEEPA didn’t confer any tariffing power at all, the Court determined that Trump’s tariffs “lack[ed] any identifiable limits” and that reading IEEPA to provide the president with unlimited tariff power would run afoul of the Constitution’s delegation of that power to Congress. Legal scholars have convincingly pushed back on the Court’s reasoning, and the administration is appealing the order at the Federal Circuit. The appellate court recently issued a stay of the order while the parties make their arguments. This means that the tariffs remain in place until August or September, when the Federal Circuit is expected to render its decision. Eventually, the case may reach the Supreme Court.
Although the administration can still plausibly hope that it will win on appeal and overturn the Court of International Trade’s order, the Federal Circuit and Supreme Court may well uphold it, putting Trump’s tariff policy in jeopardy. To save it, the White House may need to find an alternate legal foundation to enact its tariffs and retain leverage in ongoing negotiations that aim to re-order the global trading system.
In its opinion, the Court of International Trade wrote that an alternate legal foundation does exist, at least for the global and reciprocal tariffs: Section 122 of the Trade Act of 1974, a statute that allows the president to impose 15% tariffs on imports for up to 150 days in order to “deal with large and serious United States balance-of-payments deficits.” If the IEEPA tariffs are struck down, the administration could impose tariffs under Section 122 to buy negotiating time. Meanwhile, the president could order investigations under another statute, Section 301, which permits the president to impose tariffs to address foreign actions that are unreasonable or discriminatory and that burden or restrict U.S. commerce. Unlike Section 122, Section 301 tariffs last as long as the president wishes and can be for any duty amount. They formed the basis for Trump’s first term tariffs on China and conceivably could play that role again for additional countries.
The administration is reportedly pursuing this route. But this approach comes with significant drawbacks. First, like IEEPA, Section 122 has never previously been used to impose tariffs, putting the administration in uncharted legal territory defending them. For example, it’s unclear whether the statute’s reference to “balance of payments deficits” covers the trade deficit concerns Trump raised on Liberation Day. Second, Section 122 almost certainly couldn’t apply to the fentanyl and immigration tariffs levied on Canada, Mexico, and China.
Third, because Section 122 is limited to 15% tariffs for 150 days, Trump would not be able to negotiate with leverage unless this period were used to impose Section 301 tariffs, which have no such limitations. But Section 301 comes with demanding procedural hurdles. The U.S. Trade Representative would need to first conduct an investigation into our trading partners’ unfair trade practices, a process that typically takes about a year for a single country—let alone the rest of the world. The investigations could be combined and expedited, but any investigation that considered countries collectively instead of individually would be vulnerable to court challenge. And after the investigations are completed, Section 301 requires a public notice-and-comment period before tariffs are levied, creating yet another vulnerability for legal challenge. This makes Section 301 an awkward fit for a broad, global tariff policy, especially where negotiating timelines are critical.
This statutory triangulation strategy does not provide the assurance that the administration needs to negotiate from a position of strength and ensure that we end up with more balanced, sustainable trading relationships after Liberation Day. There’s a better way.
Notwithstanding our disagreement with the Court of International Trade’s opinion, if and when the stay of the Court’s order is removed, President Trump should revoke Executive Order 14257 (the order promulgating the Liberation Day tariffs) and reissue a new executive order with certain “limitations” referenced by the Court to ensure it passes constitutional muster. Critically, the limitations necessary to moot the Court’s concerns would not interfere with Trump’s substantive policy. And a new executive order could be both implemented swiftly on a global scale and tailored to survive legal challenge. This path would therefore maximize the White House’s negotiating leverage.
The legal battle over President Nixon’s global tariff order provides a roadmap for the Trump administration. In the summer of 1971, Nixon faced a balance of payments crisis triggered by a run on the dollar. Nixon issued Proclamation 4074 to address the crisis with a global 10% tariff. He did so pursuant to authority under the IEEPA’s predecessor statute, the Trading with the Enemy Act (TWEA), which contained identical “regulate…importation” language. Nixon’s proclamation styled the global tariffs as “temporary” and provided that they were not to exceed the highest duty rates already available under the normal U.S. tariff schedule. The proclamation was challenged in court, however, on appeal, the United States Court of Customs and Patent Appeals upheld Nixon’s action under the TWEA in United States v. Yoshida.
In that case, the appellate court determined that TWEA lawfully delegated power to the president to impose tariffs during an emergency. The appellate court justified its decision to uphold Nixon’s proclamation because it was limited: the Proclamation “imposed a limited surcharge, as a temporary measure calculated to help meet a particular national emergency, which is quite different from imposing whatever tariff rates [the president] deems desirable.”
When considering Trump’s global and reciprocal tariffs, the Court of International Trade attempted to distinguish the measures from Nixon’s tariffs because the former weren’t similarly limited, writing:
Like the court in Yoshida II, this court does not read the words “regulate . . . importation” in IEEPA as authorizing the President to impose whatever tariff rates he deems desirable. Indeed, such a reading would create an unconstitutional delegation of power. Importantly, President Trump’s tariffs do not include the limitations that the court in Yoshida II relied upon in upholding President Nixon’s actions under TWEA. Where President Nixon’s tariffs were expressly limited by the rates established in the [U.S. tariff schedule], the tariffs here contain no such limit. Absent these limitations, this is exactly the scenario that the lower court warned of in Yoshida…
It would be extremely straightforward for President Trump to defeat the Court’s key argument. Trump could include limitations mirroring Nixon’s in a new executive order under IEEPA, mooting both the ongoing appeal of the tariffs and the Court’s stated reasons for rejecting them.
Addressing the limitations the Court found so important would require only two minor changes. First, Nixon’s tariffs passed muster as “temporary,” even though the proclamation contained no actual end date. Nixon said the tariffs would end “when the unfair treatment is ended,” leaving the actual timeframe open-ended. For Trump, the matter may be as simple as inserting language explaining that the tariffs are similarly “temporary” in the executive order.
Nixon’s proclamation included a second limitation by capping total duty rates. His proclamation provided that imposition of the additional 10% duty would not exceed existing maximum rates in the ordinary U.S. tariff schedule, which are found in “Column 2” of the schedule. The U.S. tariff schedule provides for two categories of duty rates for imported products. “Column 1” duties are assigned to our normal trading partners and are relatively low, while “Column 2” duties apply to countries with whom we do not have normal trading relations and are much higher, generally ranging from 30% to 100%. Nixon’s Proclamation simply provided that for any given imported product, the additional 10% duties should not create a total duty rate higher than the already-high rates in Column 2. Such a limitation could be easily included in a new executive order without interfering with Trump’s substantive policy.
The Yoshida court’s decision provides significant legal support for any updated executive order President Trump may issue. The appellate court noted that each presidential proclamation under TWEA “must be evaluated on its own facts and circumstances.” This is helpful to the White House because a court reviewing any new tariff order under IEEPA would be required to evaluate the executive action separately and apart from any previously issued executive order that may have been struck down. Trump effectively gets another bite at the apple.
Perhaps most importantly, the Yoshida court ruled that the president’s emergency power to levy tariffs must be given broad deference. In fact, the court appeared to directly foreclose the animating spirit of the Court of International Trade’s decision, holding that “[t]hough such a broad grant may be considered unwise, or even dangerous, should it come into the hands of an unscrupulous, rampant President, willing to declare an emergency when none exists, the wisdom of a congressional delegation is not for us to decide.” The court explicitly cautioned that “in a statute dealing with foreign affairs, a grant to the President…should not be hemmed in or ‘cabined, cribbed, confined’ by anxious judicial blinders.” If the Trump administration issued a new executive order with the exact limitations that were upheld in Yoshida, the Court would be all but required to apply this broad deference to Trump’s tariffs.
Finally, this strategy is also applicable to the fentanyl and immigration tariffs levied on Canada, Mexico, and China. The Court of International Trade rejected these tariffs under a different legal theory: IEEPA provides that import regulations must “deal with” an emergency, which the Court found required a “direct link” between the tariffs and the threat they purport to address. The Court ruled that “there is no such association between the act of imposing a tariff and the ‘unusual and extraordinary threat[s]’ that the Trafficking [Tariffs] purport to combat.” The Court rejected the theory that the tariffs create leverage incentivizing countries to address the threats of fentanyl and illegal immigration as not direct enough. If that sounds like a head-scratcher, you have plenty of company.
The administration argued that the tariffs did address the threats directly because they “deter[red] importation of illicit drugs concealed within seemingly lawful imports,” but the Court also rejected this rationale because it was not included in the text of the executive order itself. As Harvard Law Professor Jack Goldsmith, a leading authority on executive power, pointed out, this is an infirmity “that President Trump could presumably fix today in two minutes.” Doing so would only require adding such rationale language in a new executive order, neutering the Court of International Trade’s strained objection and preserving this third and final tariff program.
This means that Trump does not need to adopt different approaches to protect different IEEPA tariff programs. He can one-shot this whole thing.
Because the Court enjoined Trump’s tariffs on grounds that are so easily remedied, the White House should simply remedy them directly, rather than taking a riskier route to global tariffs through different statutes. As courts across the country chip away at the platform that the American people voted for, the administration can, at least in the trade context, counter effectively. If the stay of the Court’s order is removed in the course of the appeal, the White House should replace the IEEPA executive orders with new executive orders that include the limitations the Court deemed necessary. Doing so would be the best way to put the White House on the strongest possible footing in negotiations with our trading partners and help the President’s team to accomplish the critical and challenging mission laid out on Liberation Day.