CIT Judges Sharply Question Legality of Reciprocal Tariffs During Hearing

The Liberty Justice Center brought the case on behalf of five importers to challenge President Donald Trump's reciprocal tariffs imposed under IEEPA (see 2504140061). After its bid for a temporary restraining order was rejected, the center filed a joint motion for a preliminary injunction and summary judgment, teeing up the May 13 hearing.

The first exchange of the hearing belonged to Reif, who asked Schwab if the question of whether an emergency under IEEPA is "unusual and extraordinary" is a political question inoculated from judicial review. Specifically, the judge asked if there are "judicially manageable standards" to apply to the issue. Restani also pressed Schwab on this question, asking what the standard is for reviewing whether an emergency is unusual and extraordinary.

Schwab at first demurred, claiming that there is no need to set a standard, since the existence of trade deficits is "so far outside what an emergency is and what an unusual and extraordinary threat is." He said setting the standard would be akin to fixing a strike zone when the president here has thrown a wild pitch.

Restani continued to press this point, asking for specific words and declaring that "'I know it when I see it,' doesn't work." She continued to ask whether a reasonable standard is whether the president "totally misunderstood" what the law requires.

Restani later asked Hamilton what standard the court should apply if it determines that the question of whether an emergency is unusual and extraordinary isn't unreviewable, to which the DOJ attorney supplied dictionary definitions of "unusual" and "extraordinary." He also invoked the U.S. Court of Appeals for the Federal Circuit's Maple Leaf standard, which asks if the president "clearly misconstrued" the statute. Hamilton added that the emergencies are unusual and extraordinary, given the recent spike in trade deficits over the last five years and the policies of foreign nations that suppress U.S. exports.

Restani asked the government what limit there is on a president's ability to declare a national emergency and when it would be reviewable, asking if a national peanut butter shortage would constitute a national emergency. Hamilton said the standards set by Congress for declaring a national emergency "mean something to the executive branch."

During rebuttal, Schwab adopted the government's standard, arguing that under the U.S. definitions of "unusual" and "extraordinary," the tariffs don't pass muster. Speaking to the media after the argument, Schwab said trade deficits are "usual" or "ordinary" and that, according to a House of Representatives report on IEEPA, there was some discussion that the unusual and extraordinary threats were conceptualized as being "rare, brief, and not a normal state of affairs." Ilya Somin, professor at George Mason Law School and attorney for the plaintiffs, said "we're basically arguing for a normal, intuitive definition of emergency and of extraordinary and unusual, that it by definition can't be something that's an ongoing thing that's been there for decades."

After Hamilton argued that unfair trade practices and trade deficits created a national emergency, Reif then pressed him on whether IEEPA is the right vehicle to address these issues, since Congress specifically enacted Section 301 and Section 122 to address these very problems. Reif then pressed the government on whether the president can circumvent antidumping and countervailing duty laws by declaring dumped and subsidized imports to be a national emergency. Hamilton said the president could declare such an emergency.

Restani also asked Hamilton about this point. The judge said the authority to impose tariffs to address a balance of payments issue was addressed in Section 122. "It's kind of implied to me that Congress didn't think it was an ongoing threat or qualified as unusual and extraordinary," Restani said.

Katzmann's questions to both Schwab and Hamilton largely centered on Yoshida, which was decided by the CAFC's predecessor court and said that President Richard Nixon validly used the Trading With the Enemy Act, IEEPA's predecessor, to impose a 10% duty surcharge. The judge asked Hamilton about a host of quotes from the decision, including the court's conclusion that a "national emergency is not a talisman enabling the president to rewrite the tariff schedules," also asking the DOJ attorney about how, unlike Yoshida, the tariffs here are working to completely upend the tariff schedule set by Congress.

In response, Hamilton said there are multiple statutes that let the president impose tariffs greater than those found in the tariff schedule, adding that IEEPA is one of those laws. Katzmann asked Schwab a similar question, to which the Liberty Justice Center attorney said the president here is "rewriting the tariff schedules" and is claiming a power that is "virtually unchecked."

Restani also asked the parties about a footnote in the Yoshida decision, which says a surcharge imposed after Section 122 passed must comply with this statute. During rebuttal, Hamilton said the footnote is merely "dicta in a footnote" that is expressing an unclear message.

Present throughout the argument were claims regarding whether the major questions doctrine compels a reversal of the tariffs. The doctrine, recently expanded on by the Supreme Court, says the executive needs an explicit delegation from Congress when regulating issues of vast political or economic significance. Restani sharply questioned Hamilton's point that this doctrine is only applicable to federal agencies and not the president, asking why the doctrine wouldn't "doubly apply" to the president, particularly since the president isn't "operating within an organic statute."

When Hamilton responded that, in the context of foreign affairs, "it's entirely normal to delegate broad powers to the president," Restani said "tariffs are the business of Congress, and they are the business of Congress to give away. It doesn't matter that there is an effect on foreign policy or foreign affairs." In response, Hamilton likened the standard in IEEPA to the standards set in Section 232, which lets the president impose tariffs by "adjusting imports," adding that IEEPA has the restriction to only impose tariffs to address an unusual or extraordinary threat.

Reif jumped on this argument, noting that the government is also saying the courts can't review whether something is an unusual or extraordinary threat. Hamilton then sought to distinguish the "meaningfulness of the statute" from the question of whether it's reviewable under the political questions doctrine.

During the hearing, the judges didn't ask a single question relating to the Liberty Justice Center's motion for a preliminary injunction or whether the five importers suffered "irreparable harm" from the tariffs. Asked whether this indicates the court will only rule on the plaintiffs' motion for summary judgment, Somin said he thinks that if the judges were to rule on a narrow injunction only applying to the plaintiffs, "I would have thought that they would ask questions about that." He added that the fact they didn't "may suggest that if they do rule in favor of us on the merits, that they may be open to the broader injunction blocking the imposition of these tariffs altogether."

The same three judges will next hold a hearing in a separate case challenging all IEEPA tariffs imposed by Trump brought by 12 U.S. states. That hearing will take place on May 21.