(Courthouse News Service)—A three-judge panel appeared skeptical Tuesday that President Donald Trump had the authority to impose blanket tariffs against foreign trade partners under a Nixon-era statute intended to define the president’s role over economic transactions following the declaration of a national emergency.
Trump has touted his tariffs as a central to his economic agenda and as an effort to tamp down trade deficits between the United States and the rest of the globe, starting with a blanket 10% tariff on all imports on April 2 before issuing a 90-day pause when the stock markets melted down.
During a so-called “Liberation Day” event, Trump introduced a set of reciprocal tariffs set at different percentages for certain trading partners — including several uninhabited islands — with higher rates for those with purportedly higher trade deficits.
In his executive order imposing the blanket tariffs, Trump declared a national emergency regarding the trade deficits, painting them as a threat to the nation’s national security and economy.
V.O.S. Selections Inc., a New York-based business that imports and distributes wines, spirits and sake, challenged the tariffs in the Court of International Trade, an oft-mentioned court in downtown Manhattan. The company was joined by fellow small businesses Genova Pipe, MicroKits LLC and FishUSA Inc.
The panel was made up of U.S. judges Gary Katzmann and Timothy Reif, a Barack Obama and Trump appointee, respectively, and Senior U.S. Judge Jane Restani, a Ronald Reagan appointee.
In their lawsuit, the companies claim only Congress has the authority to levy tariffs under the International Emergency Economic Powers Act, the statute Trump invoked when imposing the worldwide tariffs.
“His claimed emergency is a figment of his own imagination: trade deficits, which have persisted for decades without causing economic harm, are not an emergency,” the companies say in their lawsuit. “The president’s attempt to use IEEPA to impose sweeping tariffs also runs afoul of the major questions doctrine.”
Jeffrey Schwab, of the Liberty Justice Center and representing the businesses, argued Tuesday that Congress intended the 1977 statute to grant presidents the ability to regulate imports in an emergency, such as increasing inspection at ports, not impose tariffs.
He said Trump’s Liberation Day tariffs “represent an unprecedented and unlawful expansion of executive power,” noting that the U.S. has faced a slowly growing trade deficit since the turn of the century, not the sort of “unusual and extraordinary threat” required by the statute.
Restani pushed Schwab to define a standard that the court could use to decide whether Trump’s emergency declaration was lawful, but Schwab argued that a definition was unnecessary considering the unprecedented nature of the case.
“I’m asking the court to be an umpire and call a strike, and you’re asking me, ‘What’s the strike zone, is it at the knees or slightly below the knees?’” Schwab said. “I’m saying it’s a wild pitch, it’s on the other side of the batter and hit the backstop. So we don’t need to debate the difference between the strike zone.”
Justice Department attorney Eric Hamilton argued that the president had clear discretion to decide the cumulative effect of the ongoing trade deficits had reached the point of emergency.
Hamilton said that the nation’s reliance on imports from other countries has made the supply chain vulnerable, potentially exposing national security risks.
Ultimately, Hamilton argued Trump’s declaration is not reviewable by the courts because it is a political question and thus only Congress could intervene.
On April 30, Senate Republicans narrowly shot down an attempt by Democrats in the chamber to terminate Trump’s declared emergency which would have effectively blocked Trump’s global tariffs.
The 49-49 vote came weeks after the Senate approved a resolution to halt Trump’s tariffs on Canada. That resolution passed 51-49, with Republican Senators Susan Collins, Lisa Murkowski, Mitch McConnell and Rand Paul joining the Democrats, but was reversed by the later vote.
Schwab urged the panel to intervene considering Congress was unlikely to ever pass a necessary veto-proof resolution.
He pointed the the Supreme Court’s major questions doctrine, under which the high court has required clear congressional authorization for federal agencies to act on issues of “vast economic and political significance.” The principle should also apply when the president exercises powers reserved for Congress.
“If the court were to accept the position of the government, that the president has this virtually unchecked power to unilaterally issue tariffs under IEEPA on any country at any rate, at any time, for any reason as he has done, then that would be an unconstitutional delegation of power,” Schwab said.
The same three-judge panel is set to hear arguments May 21 in a parallel case brought by 12 state attorneys general.