Federal Court Judgments on IEEPA Tariffs: Essential Insights into the Possible Impact on Trump Administration's Tariff Policies
The Trump Administration's imposition of tariffs under the International Emergency Economic Powers Act (IEEPA) since early 2021 has been met with significant legal challenges. The Administration invoked IEEPA to impose "reciprocal tariffs" globally, citing national emergencies like fentanyl and illicit drug flows as justification.
The core question contested in federal courts is whether the president has the authority under IEEPA to impose such tariffs. On August 3, 2021, a three-judge panel at the Court of International Trade (CIT) issued a decision in consolidated cases brought by several importers and state governments challenging the IEEPA tariffs, ruling that the president's actions to impose tariffs under IEEPA are unlawful.
However, the CIT's ruling is not the final word on the matter. The US District Court for the District of Columbia (DDC) has also ruled that the IEEPA tariffs are unlawful, but this decision has been stayed pending appeal. The DDC's ruling is based on the fact that IEEPA does not authorize the President to impose tariffs.
Despite these rulings, the tariffs remain in effect currently because the CIT has issued a stay on orders that would invalidate them. The Federal Circuit’s decision will likely be appealed to the Supreme Court, prolonging legal uncertainty.
Critics point out constitutional problems with the Trump Administration’s use of IEEPA: the statute does not explicitly authorize tariffs, which are traditionally the purview of Congress, raising separation of powers concerns.
If the CIT's nationwide injunction is ultimately affirmed, importers may be able to seek refunds of IEEPA tariffs already paid. However, the DDC's ruling does not prevent the government from continuing to collect the tariffs from other importers.
As of March 2021, products imported from China were subject to a 20% tariff and non-United States-Mexico-Canada Agreement originating products of Canada and Mexico were subject to a 25% tariff (except certain energy and potash products of Canada, subject to a 10% tariff) under the IEEPA Fentanyl/Migration Tariff Orders.
The Trump Administration continues to negotiate with trading partners ahead of the July 9 expiration of the suspension of the country-specific reciprocal tariff rates. If these negotiations fail, the Administration may turn to other legal authorities to advance its tariff agenda if the IEEPA tariffs are blocked or found unlawful.
In conclusion, the current status is that IEEPA-imposed tariffs by the Trump Administration are active and enforced but subject to ongoing, high-profile federal litigation questioning their legality, with no definitive judicial resolution as of early August 2021.
The ongoing litigation, primarily focused on the Federal Court system, questions the authority of the President to impose tariffs under IEEPA, with both the Court of International Trade and the US District Court for the District of Columbia ruling the tariffs unlawful. Despite these rulings, the tariffs remain in effect, pending appeals, creating a prolonged state of legal uncertainty in the business and finance sectors, as well as politics and general news. Critics argue constitutional issues arise from the Administration's use of IEEPA, as tariffs are traditionally within Congress's authority, raising concerns about the separation of powers.
