CIT's IEEPA Tariff Ruling 'Flawed,' NYU Law Professor Says
The Court of International Trade's decision to vacate the executive orders imposing tariffs under the International Emergency Economic Powers Act doesn't "withstand close scrutiny," NYU Law School professor Samuel Estreicher and recent law school grad Andrew Babbit said in a blog post.
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In the post, they faulted both the trade court's decision and the decision of the U.S. District Court for the District of Columbia finding that IEEPA categorically doesn't provide for tariffs.
The CIT decision struck down President Donald Trump's reciprocal tariffs and tariffs imposed on China, Canada and Mexico meant to combat the flow of fentanyl (see 2505280068). The court struck down the reciprocal tariffs on the grounds that IEEPA doesn't let the president impose tariffs to address a balance-of-payments issue in light of the power granted to the president to do just that in Section 122. The court then vacated the fentanyl trafficking tariffs on the basis that they don't "deal with" the declared emergency, since IEEPA can't be used to create leverage over another country to address an issue.
Regarding the reciprocal tariffs, Estreicher and Babbit said there are "several problems with the court's reasoning." While the court said Section 122 precludes the president from dealing with trade deficits under IEEPA, there's "no basis in the text of the Trade Act to support this determination," the article said. Even if such express language precluding IEEPA from being used in this way existed in the Trade Act, "it would be difficult to argue that the IEEPA, which became law three years later in 1977, implicitly incorporated an exclusion for balance-of-payment tariffs."
Next, the trade court invoked language from a House committee report that accompanied IEEPA, which said IEEPA was meant to provide the president with narrower powers than found in the Trading With the Enemy Act, under which President Richard Nixon imposed a 10% duty surcharge to address a balance-of-payments issue. CIT assumed the House report referred to tariff authority, "but that inference is difficult to square with IEEPA’s carryover of identical" language from TWEA, Estreicher and Babbit said.
"Congress knows how to modify IEEPA when that is its intention, as when it expressly transferred the TWEA’s export control provisions to the Export Administration Act of 1979," the post said.
Regarding the fentanyl trafficking tariffs, Estreicher and Babbit took issue with the trade court's reasoning regarding whether IEEPA can be used to create leverage over another country. CIT "imported a proximate-cause type limit on IEEPA powers that the statutory text does not readily accommodate and raises questions about United States economic sanctions generally," the post said.
The attorneys also took issue with the D.C. district court's decision, which categorically said IEEPA doesn't provide for tariffs. The statute specifically allows the president to "regulate ... importation." Estreicher and Babbit said it's "hard to understand" what "regulate ... importation" could possibly mean if it doesn't include the power to impose tariffs. The attorneys also stressed the fact that IEEPA was passed after the U.S. Court of Appeals for the Federal Circuit's predecessor court upheld Nixon's duty surcharge under TWEA.
Estreicher and Babbit also anticipated difficulties in applying the major questions doctrine, which says the executive can only regulate on issues of major political or economic significance upon explicit delegation from Congress. The attorneys noted that this doctrine has never been applied to a delegation of power to the president and that Nixon's use of TWEA to impose a duty may play to the notion that Trump's use of IEEPA to impose tariffs isn't unprecedented.
The attorneys said none of these issues are "insurmountable," adding that a "frontal challenge on non-delegation grounds to IEEPA in both tariff and economic sanctions arenas" is a "better course."