Children's Educational Materials Producers Bring Another IEEPA Challenge
Two Illinois producers of children’s educational materials challenged April 22 President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs, adding their complaint to a growing pile making similar claims (see 2504250038, 2504140061 and 2504230067). They, like other challengers, are seeking a preliminary injunction, saying that their businesses are already suffering irreparable harm as a result of the tariffs (Learning Resources, Inc. v. Donald J. Trump, D. D.C. # 25-01248).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The producers, Learning Resources and Hand2Mind, brought their case to the U.S. District Court for the District of Columbia. The government already has asked to have the case transferred to the Court of International Trade.
To succeed on an injunction motion, the plaintiffs have to show that they are likely to succeed on the merits of their claims, that the lack of an injunction will cause them severe harm and that the “balance of equities and the public interests” weighs in favor of an injunction. Their request meets all three criteria, they said.
First, they said, IEEPA doesn’t appear to grant Trump the power to impose tariffs. By precedent, when a law will grant the executive unprecedented authority of “vast economic and political significance,” that grant of authority must be “clear” -- not merely “colorable,” they said. But IEEPA doesn’t even mention the term “tariff,” they said. The law only allows the president to “investigate, regulate, or prohibit” foreign transactions of goods or money or take action against foreign-held property.
That ability doesn’t include the “distinct power to raise revenue through tariffs or duties,” they argued.
They said several things support this. They noted that the distinction between “regulating” commerce and levying duties appears in the Constitution, which gave the former power to the president and the latter to Congress. Other language in the law would be inconsistent with an interpretation that the president can use IEEPA to raise tariffs, they argued. And both IEEPA’s legislative history and former presidents’ use of the law -- no president before Trump has used to it to impose tariffs -- indicate that the law wasn’t meant to grant the president power to levy duties.
Even if the court does find that IEEPA would let the president impose tariffs under the provision that lets it “regulate” commerce, they said the law imposes “four important limits” on the authority it grants the president. First, that authority must only be used to address an “unusual and extraordinary threat” for which a national emergency has been declared; second, the action taken under that authority must be reasonably related to that threat; third, the authority must “be exercised only with respect to” the declared national emergency, not for “any other purpose”; and fourth, the president can only regulate imports in which a foreign party has an interest.
But trade deficits aren’t a threat under IEEPA’s definition, they said. The deficits are neither “unusual” nor “extraordinary,” having existed for decades. And the reciprocal tariffs aren’t “reasonably related” to the “trade-deficit emergency the President declared” because they are “vastly overbroad.” The U.S. actually has a trade surplus with over 100 countries, but the president still imposed tariffs on them.
Second, they said, the tariffs pose “frankly terrifying consequences” for their business. They said the reciprocal tariffs would cost them nearly $100 million and force them to increase prices up to 70% “just to survive.”
They can’t absorb these costs, they said. After the tariffs hit, they said they “stopped as many shipments from China as possible because they would be unable to absorb or pass along the costs.” And “the few times in the last decades Plaintiffs have issued unscheduled price increases,” their customers have “revolted.”
Further, “the President’s approach of imposing tariffs with little notice, often suspending those same tariffs days later and then carving out various exceptions, is massively destabilizing and detrimental to Plaintiffs’ supply chains, customer relationships, and business operations,” they said. “Plaintiffs’ lost sales, profits, and customer goodwill are all forms of consequential damages that cannot be recouped in a refund action.”
And the defendant’s sovereign immunity will also mean that most of the economic harm they suffer won’t be recoverable through damages, they said.
Third, they said, an injunction would protect them from these harms and “cost the government only a temporary pause of its unlawful policies as directed to Plaintiffs -- including policies that the President himself has previously and repeatedly paused voluntarily.”