A federal court ruled on Wednesday evening that the massive tariffs President Donald Trump imposed shortly after beginning his second term are illegal.
The US Court of International Trade’s decision in two consolidated cases — known as V.O.S. Selections v. United States and Oregon v. Department of Homeland Security — is quite broad. It argues that the Constitution places fairly strict limits on Congress’s ability to empower the president to impose tariffs in the first place — limits that Trump surpassed — and it reads several federal trade laws to place rigid constraints on Trump’s ability to continue his trade war.
The decision may not be final; it can be appealed up to the Supreme Court. But if higher courts embrace the trade court’s reasoning, Trump most likely will not be able to reimpose the sweeping kind of tariffs at issue in the V.O.S. Selections case, although he might still be able to impose more modest tariffs that are more limited in scope and duration.
The three-judge panel that decided V.O.S. Selections unanimously agreed that the Trump’s tariffs, as they stand now, are illegal in an unsigned opinion. The panel included judges appointed by Presidents Ronald Reagan, Barack Obama, and Trump himself.
The trade court judges reached four significant conclusions in the V.O.S. Selections opinion
Trump primarily relied on the International Emergency Economic Powers Act of 1977 (IEEPA) when he imposed his tariffs. That statute permits the president to “regulate…transactions involving, any property in which any foreign country or a national thereof has any interest,” but this power “may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared.”
The trade court’s first significant holding is that, although a federal appeals court has held that this power to “regulate” foreign transactions sometimes permits the president to impose tariffsthis statute cannot be read to give Trump “unlimited tariff authority.” That is, the IEEPA does not give Trump the power he claims to impose tariffs of any amount, upon any nation, for any duration.
Significantly, the trade court, based in New York City, concludes that the statute cannot be read to give Trump unchecked authority over tariffs because, if Congress had intended to give Trump that power, then the statute would violate the Constitution’s separation of powers because Congress cannot simply give away its full authority over tariffs to the president.
Among other things, the court points to a line of Supreme Court decisions establishing that Congress may only delegate authority to the president if it lays “down by legislative act an intelligible principle to which the person or body authorized to fix such (tariff) rates is directed to conform.” So, if the president’s authority over tariffs is as broad as Trump claims, the statute is unconstitutional because it does not provide sufficient instructions on when or how that authority may be used.
The court’s second significant holding arises out of Trump’s claim that the tariffs are needed to address the nation’s trade deficit — the fact that Americans buy more goods from foreign nations than we export. But, as the trade court explains, there is a separate federal law — Section 122 of the Trade Act of 1974 — which governs the president’s power to impose tariffs in response to trade deficits.
This statute only permits the president to impose tariff rates of 15 percent or lower, and those tariffs may only remain in effect for 150 days. The trade court concludes that Trump may only rely on his authority under Section 122 if he wants to impose tariffs to respond to trade deficits. So, while he could potentially reimpose some tariffs under this law, they would expire after five months.
The court’s third significant holding arises out of IEEPA’s language stating that any tariffs imposed under this statute must “deal with an unusual and extraordinary threat.” Trump justified some of his tariffs by claiming that they will help deter the importation of illegal drugs into the United States, but the trade court concludes that these tariffs don’t actually do anything to “deal with” the threat of drug trafficking — and thus they are illegal.
As the trade court argues, the tariffs do not directly prevent any illegal drugs from entering the United States. Trump’s lawyers argued that the tariffs will help reduce illegal drug trafficking because other nations will crack down on drug dealers in order to be rid of the tariffs, but the court rejects the argument that the tariffs can be justified because they pressure other nations to shift their domestic policies.
“(H)owever sound this might be as a diplomatic strategy, it does not comfortably meet the statutory definition of ‘deal(ing) with’ the cited emergency,” the court argues, adding that “it is hard to conceive of any IEEPA power that could not be justified on the same ground of ‘pressure.’”
Finally, the court ends its opinion by permanently enjoining the tariffs on a nationwide basis.
The Supreme Court is currently debating whether to limit lower courts’ power to issue such nationwide orders, but the trade court makes a strong argument that it is constitutionally required to block the tariffs throughout the country: As the V.O.S. Selections opinion notes, the Constitution provides that “all Duties, Imposts and Excises shall be uniform throughout the United States.” So, if these tariffs cannot lawfully be imposed on one person, the same rule must apply to all persons.
So what happens from here?
The trade court is the first federal court to rule on whether these tariffs are legal, but it is unlikely to be the last. This court’s decisions ordinarily appeal to the US Court of Appeals for the Federal Circuit, and then to the Supreme Court. And Trump is all but certain to ask higher courts to lift the trade court’s injunction.
These higher courts could potentially reveal fairly soon whether they think the tariffs are legal. In an order accompanying the trade court’s decision, the court announces that “within 10 calendar days necessary administrative orders to effectuate the permanent injunction shall issue.” So, if no higher court steps in, Trump’s tariffs will cease to exist very soon.
Of course, Trump will no doubt seek a stay of the trade court’s decision from the Federal Circuit and, if the Federal Circuit rules against him, the Supreme Court. That means that, depending on how the Federal Circuit rules, the Supreme Court may have to decide whether to reinstate the tariffs within weeks.
So, while higher courts will need to weigh in before we know if the tariffs will survive, we may know what the justices think about Trump’s tariffs very soon.
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