12 States File for PI Against IEEPA Tariffs, Claim Tariffs Can't 'Deal With' Stated Emergencies

The 12 states brought their suit to the Court of International Trade last month to argue that Trump exceeded the authority granted by IEEPA in taking any tariff action under the statute (see 2504230067).

Now filing for a PI, the states said they are likely to succeed on the merits, since the president failed to identify an "unusual and extraordinary" threat when imposing the reciprocal tariffs. While Trump identified the threat as persistent U.S. trade deficits, Oregon and Arizona said any problem that is "persistent" is a "normal, ongoing problem" and not unusual or extraordinary.

Even if persistent problems could be unusual, trade deficits aren't "extraordinary threats," since they have been a "feature of the U.S. economy for decades," the brief said. And while Trump said the deficits threaten to suppress wages or consumption, "reliable economic data shows that wages and personal consumption have generally increased over the last decade," the brief said.

In addition, the states argued that none of the tariffs imposed under IEEPA, which include the reciprocal tariffs and tariffs on China, Canada and Mexico to address the flow of fentanyl into the U.S., actually "deal with" their stated problems, since they "bear no reasonable connection to remedying them."

The states said the tariffs aren't targeted at dealing with the alleged harm caused by trade deficits to domestic manufacturing or the suppression of wages. The tariffs aren't "calibrated to alleviate suppressed wages or consumption," since the baseline 10% tariff applies "without regard to how any particular country’s trade practices threaten domestic industries," the brief said. And the tariffs aren't responsive to any country's duty rates but are instead based on a formula with "dubious theoretical assumptions and controversial methodological approaches."

Similarly, the tariffs can't reasonably deal with the flow of fentanyl from China, Canada or Mexico, the states said. The tariffs on Canada and Mexico aren't "tailored to counteract drug trafficking for the obvious reason that drug traffickers will not pay tariffs on the drugs that they illegally smuggle into this country," the brief said. The tariff orders don't even try to explain how placing tariffs on "all lawfully imported goods will deter the smuggling of illegal drugs," the states argued. If anything, the duties will up the price of lawful goods compared with illegal drugs, "causing harm to lawful commerce without necessarily impacting illegal trade."

The China tariffs also "bear no reasonable connection to the threats that they claim to address," since the China tariffs don't "target goods related to drug trafficking" and apply to nearly all goods from China, the states argued.

At the outset of their brief, the states sought to establish standing to challenge the IEEPA tariffs, since they largely don't act as the importer of record and don't directly pay the duties. The brief said the states are suffering "actual, ongoing, and imminent economic harm" from the duties, including the increased cost of goods and equipment subject to the tariffs and the increased costs of services from contractors who rely on imported goods. The duties also will up states' administrative costs in dealing with contractors and will harm the states' "ability to plan and budget their limited resources," estimating $1.6 billion in costs.

The states said this harm is fairly traceable to the announced tariffs, since both the trade court and the U.S. Court of Appeals for the Federal Circuit have said that "the economic harm caused by a tariff is not limited to the importers who pay the tariff directly." The brief invoked the trade court's 2019 decision Invenergy Renewables v. U.S., which said causation was established when a party's economic and reputational harms flowed from reliance on "the prior tariff status quo" and attempts to adjust to the challenged tariff decision.

"Even where the States are not paying the tariffs directly, the impact of those tariffs on the cost of goods, equipment, and services on which the States rely, and the impact on the States’ ability to accurately plan and budget, are traceable to the tariffs themselves," the states said. The brief added that the fact that they don't pay the tariffs directly doesn't cause them to lose the redressability prong of standing, since redressability is "satisfied when a third party 'is likely to respond to the government’s conduct in a way that causes the plaintiff’s injury to be redressed.'"

The 12 states additionally argued that they are likely to suffer irreparable harm from the tariffs. The brief provided multiple examples of the alleged harm. For instance, the University of Oregon’s Materials Science Institute is "currently expending work hours to identify funding to cover the unexpected $100,000 tariff cost for a German transmission electron microscope," the states noted.