Preliminary Injunction Motion Coming in CIT Case on IEEPA Tariffs, Counsel Says
Five importers challenging the constitutionality of the International Emergency Economic Powers Act as a source of tariff-setting authority plan to file a motion for a preliminary injunction in the coming days, counsel for the companies told us. Jeffrey Schwab, senior counsel at the Liberty Justice Center, said the PI bid will request an injunction on the collection of all tariffs issued under the IEEPA.
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To receive a preliminary injunction, a party must show it's likely to succeed on the merits, it's likely to suffer irreparable harm without the injunction, the balance of equities is in the party's favor and the injunction is in the public interest. Injunctions barring the collection of duties from the Court of International Trade are rare and usually encounter difficulty on the irreparable harm element, since mere economic harm rarely is elevated to irreparable harm, particularly in light of a court's ability to order the losing side to pay damages (see 2504010036).
Schwab said the five companies challenging Trump's "Liberation Day" tariffs likely will fare better in getting an injunction against the duties due to their size and scope. The tariffs are "existential to many businesses, because the costs are so high that they're either going to have to significantly raise their prices" or reconfigure their entire supply chain, he said.
For instance, one of the clients, V.O.S. Selections, imports wines and spirits. Schwab said that "at a certain price, people aren't going to buy wine," which could potentially put the importer out of business. "By the time that the court sort of would rule on this, on an ordinary timeline, I don't think damages would be sufficient, because things will change so significantly," he added.
As far as his ability to prove that one of the plaintiffs will go out of business, Schwab said it "depends on the facts." For instance, one of the plaintiffs, MicroKit, is a two-person operation, making "the threshold for how a business could go into bankruptcy" lower.
The lawsuit was brought this week by the Liberty Justice Center and challenges both the reciprocal tariffs as exceeding the president's statutory authority under IEEPA and IEEPA itself as an unconstitutional delegation of legislative authority (see 2504140061). The case was brought to the trade court, in contrast to two other challenges to various IEEPA tariffs that were brought to federal district courts. Schwab said he believes CIT to be the best court for IEEPA-related challenges due to the fact that some of his claims "assume the President can authorize at least some tariffs" under IEEPA.
This claim is distinguished by the parties who brought their cases in federal court, who claim that CIT doesn't have jurisdiction, since IEEPA is a statute that cannot be used to impose tariffs (see 2504080072).
Part of Schwab's claim that President Donald Trump exceeded his statutory authority under IEEPA in imposing the tariffs is that "trade deficits" don't amount to a valid declaration of "national emergency." He said while he's "not sure where to draw the line" on what is or isn't a national emergency, "we know this is way over the line." Courts often won't give a "precise standard" but still find violations of statutory authority, Schwab said.
"I haven't thought through all the details of how you would come up with a standard, but in this case, you can’t just say the magic words [national emergency]," he added. "There has to be some relationship between this so-called emergency and actual national security, you have to show that." Schwab also pointed to the statutory language, which says the president can only regulate under IEEPA if there's an "unusual and extraordinary threat." It's hard to say trade deficits are unusual or extraordinary when they have been happening for 50 years and aren't harmful, Schwab said.
Schwab suggested that the case could be mooted should Congress come in and pare back the president's authority under IEEPA, as is currently being suggested by some Senators, though it ultimately would depend on how exactly the president's authority has been curtailed.
Schwab is developing his arguments along with other attorneys at the Liberty Justice Center and Ilya Somin, law professor at George Mason's Antonin Scalia Law School. However, at this stage, only Schwab and Bridget Conlan, both Liberty Justice Center employees, have appeared at the trade court. Schwab said the remaining attorneys -- Somin, Reilly Stephens and James McQuaid -- are in the process of being certified to appear at CIT. He said all the attorneys have to submit a certificate of good standing with another federal or state supreme court bar.