Attorneys Speculate on How Far SCOTUS Will Go in Reviewing CAFC's IEEPA Tariff Ruling

The Federal Circuit said President Donald Trump exceeded his power under IEEPA by imposing the reciprocal tariffs and tariffs on China, Canada and Mexico to combat the flow of fentanyl (see 2508290073). A majority of the court declined to rule on whether or not the statute categorically provides for tariffs, merely ruling that the tariffs before them on review violated limits in the statute.

The dissent said it would have held otherwise. Taranto, the author of the dissent, said the statute, which lets the president "regulate ... importation" following the declaration of an emergency, not only includes the power to tariff but permits the challenged tariff actions.

Taranto said that the major questions doctrine, which says the authority to regulate on issues of major political or economic significance must be explicitly delegated by Congress, doesn't bar the tariffs. The dissent emphasized a recent concurrence, penned by Justice Brett Kavanaugh, in FCC v. Consumer Research, which says the doctrine doesn't apply in the "national security or foreign policy contexts," since it's permissible for Congress to "give the President substantial authority and flexibility to protect America and the American people."

John Veccione, senior litigation counsel at the New Civil Liberties Alliance and counsel for the plaintiffs in a separate case against the IEEPA tariffs, speculated that certain justices on the Supreme Court may be more "sympathetic" to these arguments. In particular, Justices John Roberts, Elena Kagan and Brett Kavanaugh have all worked in the White House and thus may be willing to give the chief executive more rope in the nondelegation and major questions contexts, Veccione said.

However, he added that only Kavanaugh has "really carved out an exception for the President on major questions." Though John Magnus, president of TradeWins, said he wouldn't be surprised if Kavanaugh "can assemble a majority on the Supreme Court for that point of view."

Jennifer Hillman, professor at Georgetown University Law Center and co-author of an amicus brief in the case arguing against the tariffs, told us that prior to answering whether the doctrine exempts tariffs, since they would be considered to be tools in the foreign policy or national security context, the Supreme Court would have to first find whether tariffs were actually authorized under IEEPA. Hillman said the question becomes "very circular" in that IEEPA tariffs are a "tool used in that [foreign affairs] space only when authorized."

She added that she doesn't "see how you say that this is so clearly a foreign affairs power that therefore gets exempted from the major questions doctrine when it is not at all clear that tariffs are a foreign affairs power" or included in the statute, which doesn't use the word "tariff" or "duty."

In the dissent, Taranto emphasized the breadth of the power conferred in IEEPA, finding there to be no "common sense" expectation "that Congress was unlikely to be granting" tariff authority. The judge added in a later section on nondelegation more broadly that tariffs play a key role in the president's exercise of his foreign affairs authority and that the "Supreme Court has recognized that the congressional grant to the President of tariffing and other import-control authority dates back to the founding era and has treated such actions as involving foreign affairs."

Taranto also emphasized the fact that IEEPA was passed after Yoshida International v. U.S. was decided, in which CAFC's predecessor court upheld President Richard Nixon's 10% duty surcharge under IEEPA's predecessor, which used the identical operable language. Thus, the dissent found IEEPA to be an "eyes-open congressional grant of broad emergency authority" that included the power to tariff.

Hillman found this to be an "extremely weak" part of the dissent, particularly in light of all the differences between IEEPA's predecessor, the Trading With the Enemy Act, and IEEPA. She added that if Congress ratified Yoshida, "it has to have been a clearly understood and accepted judicial decision," which was not the case in light of the passage of Section 122, which specifically provided the tariff power claimed by Nixon, and the fact that Nixon's use of TWEA to impose the duty was the "one and only time" the act was used for tariffs.

Even if some of the justices accept that Congress ratified the holding of Yoshida, the Yoshida court also unequivocally said unbounded tariff authority under TWEA is unconstitutional, Hillman noted.

The CAFC majority also emphasized Yoshida's discussion of the limits on the tariff authority purportedly found in TWEA, since the court only upheld Nixon's duties after noting that they were limited in scope and duration. The government's cert petition emphasized Taranto's dissent in countering this point, finding that the "supposed limits" on Nixon's duty surcharge either didn't actually exist "or were imposed pursuant to separate statutory constraints that do not apply here."

Magnus stressed this point, noting that the Yoshida court's discussion of the limits on the Nixon duty was clearly dicta. The holding of Yoshida was that "regulate ... imports" includes tariff power, he said. "It's super awkward how the majority tries to wriggle out from that by treating it as if it was more than dicta, but it wasn’t more than dicta," he said.

Veccione said he believes the Supreme Court likely will avoid the major questions and nondelegation scraps and settle the matter "on pure textualism."

Should this be the case, and the Supreme Court looks to pull from Taranto's dissent, the high court will note the dissent's claim that tariffs are "clearly a way of" regulating imports under various dictionary definitions of the term "regulate." Taranto said this "straightforward result is supported by the longstanding judicial recognition that taxes are often a species of regulation -- specifically aimed at altering conduct."

The dissent added that IEEPA includes the "extreme tools" of prohibiting all imports, meaning it surely must include the lesser power to tariff. Taranto said he knows of "no persuasive basis for thinking that Congress wanted to deny the President use of the tariffing tool, a common regulatory tool, to address the threats covered by IEEPA."

Veccione said the Supreme Court will be wary of interpreting the word "regulate" to include the power to tax. Likening such a ruling to "Chekov's gun," the storytelling principle by which a featured element must later be used, Veccione said such a ruling "would lay around" until "it went off in an even more uncongenial situation."

As far as how the Supreme Court will actually come down on the issues in light of the defense and the cert petition, Magnus said the court likely will go where the majority didn't: it will allow some tariffs but explain the limits more clearly. However, Magnus believes any limits on tariff authority under IEEPA are likely to come from the provision that the president's actions "deal with" the declared emergency.

While Judge Taranto seemingly gave the president wide authority under this provision, Magnus said that in order to avoid the appearance of giving a blank check, the high court might signal a willingness, using this “deal with” requirement, to trim the furthest-afield elements of a tariff program, such as the extra duties specifically keyed to Brazil’s prosecution of former President Jair Bolsonaro.