Trump Tries to Push Tariff Fight to Trade Court With Better Odds

President Donald Trump wants legal challenges to his sweeping tariffs to be heard by a specialized trade court, an approach that worked in his favor during his first administration even though it didn’t give him an immediate victory.

The Trump administration is seeking to transfer three cases filed in federal courts in Florida, Montana and California to the US Court of International Trade, or CIT, whose judges handle technical disputes over tariffs. That court ruled against the president in lawsuits targeting his 2018 steel tariffs, but Trump emerged victorious when an appeals court sided with him.

Legal experts say that steering the current cases on the same path will likely benefit the administration because they, too, would go through the US Court of Appeals for the Federal Circuit, which has historically been deferential to the authority of presidents to levy tariffs.

“CIT in a number of cases has gone against the government,” said Warren Maruyama, a former general counsel of the Office of the United States Trade Representative for then-President George W. Bush. But “the bulk of them have been overturned once they have gotten up to the federal circuit,” said Maruyama.

The US Court of International Trade in New York.

Photographer: Ajay Suresh

Is Trump’s Use of Emergency Law for Tariffs Legal?: QuickTake

Justice Department lawyers argued in a filing last week that a challenge to the tariff regime brought by California Governor Gavin Newsom and filed in San Francisco federal court actually belongs in the CIT in New York. That followed two other transfer requests by the government in cases brought by members of the Blackfeet Nation tribe in Montana and by a small stationery business in Florida. A fourth case was filed directly in the CIT.

The Justice Department warned in a filing that if cases are allowed to proceed in various district courts, “there would be a risk of inconsistent results and different tariffs imposed in different regions of the country, in direct conflict with Congress’s statutory design.” The department declined to comment.

The lawsuits challenge Trump’s unprecedented use this year of a statute called the International Emergency Economic Powers Act to impose sweeping tariffs that have hammered financial markets, prompted forecasts of a possible recession and hurt relationships with overseas partners.

National Emergency

IEEPA gives the president broad authority to regulate certain financial transactions when declaring a national emergency in response to an “unusual and extraordinary threat.” In February, Trump cited an “extraordinary threat” from undocumented immigrants and illegal drugs while announcing tariffs on China, Mexico, and Canada.

The open question is whether the statute applies to tariffs. The Trump administration contends that IEEPA authorizes tariffs and that the CIT has “exclusive jurisdiction” over tariff-related cases. The challengers argue that IEEPA doesn’t relate to tariffs and the CIT therefore shouldn’t handle the lawsuits.

This dispute means that the district judge presiding over the stationery company case in Florida will need to address the core issue of the litigation just to determine where the case will proceed, said Andy Morris, senior litigation counsel at the New Civil Liberties Alliance, the conservative legal advocacy group representing the business. “The premise of our entire case is that this emergency statute that Trump invoked is not a law that provides for tariffs,” he said.

On Tuesday, a three-judge panel of the CIT issued the first substantive order in the case that was filed directly in the trade court. The judges refused a request by five small businesses represented by the Liberty Justice Center to immediately halt Trump’s tariffs, saying the companies failed to show the tariffs would cause them “immediate and irreparable harm.” The panel set a hearing for May 13 to consider the plaintiffs’ request for a preliminary injunction.

If all the cases are consolidated in the CIT, appeals would flow to the Federal Circuit, which has a lengthy history of deferring to the executive branch’s authority and expertise.

The Washington-based Federal Circuit is a specialized court that hears appeals across the nation in several areas, including international trade, patents and government contracts. It’s separate from the US Court of Appeals for the District of Columbia Circuit.

The odds of a favorable ruling for Trump from the Federal Circuit are higher than the odds from other circuit courts, said Timothy Meyer, a professor in International Business Law at Duke University who worked on challenges to Trump’s first-term steel tariffs.

‘Highly Deferential’

“During the first Trump administration, the Federal Circuit issued a series of decisions on the president’s tariffs that were highly deferential to the president and appeared to ignore limits that Congress had placed on the president’s exercise of delegated power,” said Meyer.

While Trump is the first president to use IEEPA for tariffs, Richard Nixon relied on a predecessor statute called the Trading with the Enemy Act of 1917 to justify a 10% levy on imports. At the time, a predecessor court to the Federal Circuit handed Nixon a legal victory when it reversed a lower court decision.

Even if the Trump administration is able to transfer the cases and achieve favorable rulings, the Federal Circuit may not have the last word.

The showdown could end up at the US Supreme Court, whose 6-3 conservative majority gives the president a natural advantage, although the justices have shown a willingness to curb federal power when it’s used to make significant policy changes.

Where the courts will land on the novel legal theory behind Trump’s tariffs remains to be seen.

“The issues here have never been addressed before,” said Alan Sykes, a Stanford Law School professor who specializes in international economic law. “The question of what exactly the IEEPA means when it talks about emergencies and whether that’s reviewable by a court are open questions.”

To contact the reporters on this story:
Sabrina Willmer in Washington at swillmer2@bloomberg.net;
Malathi Nayak in San Francisco at mnayak21@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Peter Blumberg

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