Government Using 'Magical Thinking' in Its Defense in IEEPA Suit, CEO of Plaintiff Says

Woldenberg, speaking on a podcast with "The Trade Guys" at the Center for Strategic and International Studies, said that in U.S. v. Yoshida, the court, in what he "would describe as magical thinking," found that the word regulate contains "some undefined power to impose tariffs." Without what he described as an "imaginary" power, the case is boiled down to "where does it say tariff" in IEEPA? “There is no word tariff. There's no word tax. There's no reference to revenue raising. It is nowhere to be found in legislative history.”

Woldenberg, a former lawyer, said today's courts, utilizing strict constructionism, should find that "hidden meanings are a problem," within laws because Americans "should be entitled to read a written law and know what it says" and does. Ultimately, his case can proceed without adhering to the precedent set in Yoshida, because it is "not burdened with the imaginary presence of the power to tariff that is only binding in that one circuit," he said.

Another problem with the government's defense is that it creates "taxation without representation," he said. When transferring power to the executive branch, Congress also must give "limiting instructions," Woldenberg said, "so it is illegal to transfer vested responsibilities such as the power to tax or the power to legislate." While Congress has delegated "the power to regulate" tariffs through the Harmonized Tariff Schedule, he said that "the power to regulate and the power to tax are two different things -- the only way they can be combined is if you have both powers."

As for the government's position that it has broad remit in the realms of foreign policy and national security, Woldenberg said that placing a tax on Americans who are importing "is not foreign policy. It is not an international incident." When he purchases a product and imports it into the country, by imposing a tariff, "they are taxing me on that." He said that the language in the IEEPA that discusses regulation of foreign property is referring to freezing foreign assets, but "there's nothing that indicates that to solve some foreign problem," the solution is to "tax Rick Woldenberg." If President Donald Trump "doesn't want fentanyl coming in from Canada, the solution isn't, tax Rick Woldenberg's educational toys that are coming in from Taiwan," he said.

There is nothing in the IEEPA that "says taxing me is an expression of foreign policy," Woldenberg said. "Where does it say that? Read the words."

When it comes to the jurisdictional argument, he said, the Court of International Trade "has no jurisdiction" because "IEEPA does not provide for tariffs." He said that it cannot provide for tariffs because "it makes no sense. It's not how laws are done." His case, Learning Resources v. Donald J. Trump, cites James Madison "talking about the intentionality" of "where taxing was supposed to be done," he said. If the Trump administration had chosen to levy these tariffs through legislation, then "I would have nothing to say about it," Woldenberg said.

"Pass a bill, man," Woldenberg said of Trump. "Write a bill. Have some hearings, take some comments, and then everybody stand in a public place in full view of America and vote in the sunshine. You want to tax me $50 billion a month? Go right ahead, just put your name on it, and then we, the voters, get to decide if we want you to be our government. They don't want to do that. They want to slip it in without any voter having a say. And this is all about taxation without representation. Do it the way the Constitution says: vote."

On the matter of Trump's declared fentanyl emergency, Woldenberg that it is "not really relevant" to his case at the D.C. Circuit, because "if there's no power to impose tariffs under IEEPA, there's no power to impose tariffs under IEEPA. End of story." Even if it was relevant, he said, "I can assure you that we don't trade in fentanyl, so there's no relationship there."

Woldenberg was dismissive of the government's argument that a negative ruling against it would have "destructive" consequences: "I'm not aware of a principle in American law, that if you steal enough money, it becomes legal."

He said that he doesn't think that the U.S. Court of Appeals for the Federal Circuit will side with government in another separate, ongoing challenge of the IEEPA tariffs "because it would cause them inconvenience to return money to us that they had no legal basis for taking." The government didn't have a right to take that money, he said, and should pay it back with interest: "we'll be standing by the mailbox waiting for the check."

Looking forward, Woldenberg said that the Federal Circuit "knows this is an emergency," so he is expecting a ruling "any time," but speculated that it will come "in the month of August." He said that "whoever loses" will take the case to the Supreme Court, which will put a nationwide injunction back into play. He wondered if the Supreme Court will let an injunction stay in place and "prevent the government from taking $50 billion dollars of illegal taxes from us month after month after month." Those tariffs represent the "actual emergency," he said, and his company is in a "hot hurry" to resolve the case so that his company can stop paying them.

When the Supreme Court takes on the other IEEPA challenge, Woldenberg said that he believes the court "will look at both of the cases together, because there's a split in the circuit."

"We've been waiting for some foreign country to pay them for us," Woldenberg quipped, "but, you know, maybe they lost our address." It is his company that is on the hook for the increased tariffs, he said. "We have to pay the bills if we want our inventory. I swear, I thought it was another country, but they just haven't paid."

Woldenberg anticipates a favorable ruling from the Supreme Court, because as "committed public servants," they are "hostile to one branch of government stealing the vested responsibilities of another branch of government." He said that his case is a "very forward-looking case, a case that points towards the future," because it deals with executive branch overreach: "The executive branch can't do this. The president is not permitted constitutionally to legislate, and Congress is not permitted constitutionally to let him legislate."

"I feel a lot of responsibility" from the importance of the case to addressing the separation of powers, he said. "We're out to win this case. These are important issues, and we think of ourselves as part of a community trying to figure out the path forward."