Scope of Trump’s Next Tariffs Loom as Key to Legal Challenges

The scope of new tariffs the Trump administration is contemplating hovers as a key factor in how vulnerable they will be to legal challenges.

President Donald Trump is trying to reconstruct the widespread emergency powers tariffs struck down by the Supreme Court in February. His administration has since opened trade investigations into whether several dozen countries’ policies on forced labor import bans and excess capacity constitute unfair practices that burden US business.

Across comment letters and public hearings, even many of the companies and industry groups calling for some tariffs to address what they described as unfair practices in their sectors urged the administration to take a targeted approach. Only countries or industries displaying the problems should be hit with tariffs, many comments said.

But the administration has hinted it’s considering a broad approach to rebuilding its tariff network. It launched investigations under Section 301 of the Trade Act of 1974 that cover major US trading partners like Canada, Mexico, China, India, and Brazil, with 59 jurisdictions plus the EU on one or both lists.

The administration aims to impose new duties by July, when a stopgap tariff is set to expire. That temporary measure, meanwhile, faces its own court battle.

Legal challenges against the forthcoming 301 tariffs are almost inevitable. Plaintiffs may be able to make stronger arguments if the US Trade Representative chooses a broader approach, attorneys said.

“Everyone’s gearing up, both sides,” said Kathleen Claussen, a professor at Georgetown Law and former USTR attorney. “The government is anticipating cases, and plaintiffs are preparing their strategies for potential action, coming out of the 301s.”

Mustering Arguments

The key legal question in the International Emergency Economic Powers Act tariff case was relatively simple: Does this law authorize the president to impose tariffs?

Section 301 challenges will take a different shape, lawyers said. For one thing, unlike IEEPA, the law was designed to be a tariff authority.

A suit against Trump’s first-term Section 301 China tariffs included procedural arguments about whether the government followed proper steps. That case is still not fully resolved years later.

A challenge to 301 tariffs would be hard to win procedurally, Claussen said. If the government errs on procedure, the court tells them to fix it; then they do, and move on.

“It is not difficult for an administration that wants to comply with the APA to do so,” said John Foote, a partner at Sidley Austin, referring to the Administrative Procedure Act.

An argument that the government misconstrued the statute, or that the correct conditions weren’t in place to use this tariff tool, could have more legs.

Plaintiffs scored an early win May 7 at the Court of International Trade in a case against tariffs imposed under Section 122 of the Trade Act of 1974, the temporary 10% global duties put in place to bridge the struck-down IEEPA levies and the forthcoming 301 measures. The administration has already said it’s appealing.

The 122 opinion pushes back on the president’s argument that trade deficits are a match for the “balance of payments” problem Congress describes in the law.

“I always thought it would be hard to find a judge that would be willing to second-guess the president on something like this,” said William Reinsch, a non-resident senior adviser at the Center for Strategic and International Studies.

“If they did it once, they’re capable of doing it again—so it gives some reason for law firms to tell people, you might be able to win this one,” he added, referring to potential 301 suits.

Plaintiffs may look to argue USTR got its facts wrong in the 301 findings—incorrectly identifying overcapacity or a failure to deal with forced labor imports, Reinsch said. Or they could argue one or both investigations don’t fit Section 301 because they’re not about unreasonable or discriminatory practices that burden or restrict US commerce, he said.

The latter argument won’t be easy, since Section 301’s language is “so darn broad,” Claussen said. And an argument that the government didn’t prove a particular jurisdiction meets the 301 standards could be overcome if the government collects more evidence, she added.

Pre-determined Outcomes

If new tariffs largely replicate those stripped away by the Supreme Court ruling, plaintiffs may also be able to argue that the outcome was pre-determined.

Such an outcome “gives the opposing lawyers an argument to go back and say, ‘this was all a scheme just simply to reinstate what the Supreme Court invalidated,’” Reinsch said. “If instead they don’t do that, and create different remedies, that makes the argument much harder.”

The tariffs will be harder to overturn if USTR builds a robust factual basis for each country, and makes sure the tariff remedy is tied to those findings, said Matthew Seligman, founder of Grayhawk Law, which works on appellate and tariff refund litigation.

“There’s definitely an opening for a challenge,” he said. “This has a better chance of success than other 301 challenges have had, precisely because, look, we don’t know what the administration is going to do, but it’s telegraphing that it’s going to overreach.”

“It’s that overreach that’s the primary legal vulnerability,” he added

Companies are largely preparing for the return of something resembling the IEEPA tariff regime, said Patrick Childress, a partner at Holland & Knight and former USTR attorney. But the government may have a good reason to go a different direction.

“USTR may feel compelled—perhaps as a way to shore up its legal position in anticipation of future litigation—to create some daylight between the old IEEPA tariffs and the new Section 301 tariffs,” he added.