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The Lawfare Podcast
Lawfare Daily: Two Courts Rule Against Trump’s IEEPA Tariffs, with Peter Harrell
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- [00:01]
Scott R. Andersen
The following podcast contains advertising to access an ad free version of the Lawfare Podcast Become a material supporter of lawfare@patreon.com lawfare that's patreon.com lawfair also check out lawfare's other podcast offerings, rational security chatter, lawfare, no bull and the aftermath.
- [00:32]
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- [01:48]
Peter Harrell
I think what you see is all three of them sort of saying, well, look, Congress could not, with ieepa, simply have delegated all of its tariff authority to the President to basically do any tariffs at any rate on any product, on any country for any duration. Which is essentially what the government is arguing IEEPA lets it do.
- [02:11]
Scott R. Andersen
It's the Lawfare podcast. I'm Senior Editor Scott R. Andersen, joined by contributing editor and leading sanctions expert Peter Harrell.
- [02:19]
Peter Harrell
If I were going to bet on this case, I would Bet that the CIT's ultimate outcome is upheld. Like, it'll be interesting to see if the Federal Circuit comes out a little bit different on the reasoning, even if it reaches the same ultimate outcome. That'll be an interesting thing to watch, but it does seem to me more likely than not that the Federal Circuit will uphold the CIT's ultimate order.
- [02:45]
Scott R. Andersen
Today we're talking about the not one, but two recent federal court opinions that have enjoined the tariffs imposed by President Trump and where the litigation seems likely to go from here. Well, Peter Kalu Kalay, the day we have all been waiting for among sanctions nerds has come. We have not one, but two judicial opinions on President Trump's IEPA base. That's the International Emergency Powers act based tariffs that we have been debating. Have recorded a couple of podcasts on that you've been writing for us about at lawfare, and there are some pretty juicy opinions. So thank you for coming back on the podcast to talk them over with us for a bit of a deep dive for the other sanctions nerds out there.
- [03:23]
Peter Harrell
It's great to be back and I hope that some of the tariff nerds will find this interesting as well as the sanctions nerds.
- [03:28]
Scott R. Andersen
You know, it's not entirely an overlapping Venn diagram, but it should be more so. You know, that's what we do. We bridge divides here at Lawfare, and hopefully we can bring these two valued communities together. So let's start with the second of the two opinions. I'll tee this up for folks who may not have been following the news. We're recording this, I should say, on midday Friday, May 30, folks watching this or listening to this a little bit later. There may have been subsequent developments in this case. I suspect we may see a stay potentially coming from another court in the interim between when this comes up, at least in podcast form, although we'll see. We'll talk about that a little bit later. But of course we received two opinions, both of which have put barriers and stopped, at least temporarily, President Trump's tariffs worldwide tariffs that he's imposed since entering office using ipa, the International Emergency Economic Powers Act. One of those opinions awarded a preliminary junction in the D.C. district Court being this Learning Resources v. Trump that has been appealed to the D.C. circuit, but we don't yet have any decision on an administrative stay or other measures. So technically that is still a live preliminary injunction as of the time of recording. The second case, which technically came out the day before, is VOS Selections v. Donald Trump. That is from the Court of International Trade, a little bit of an esoteric body that handles trade issues, but has received jurisdiction including being transferred several related matters or similar challenges by other district courts around the country that they issued a far reaching summary judgment on behalf of the plaintiffs, basically saying with finality, no, we don't think the President has the authority to implement these sorts of tariffs through IPA that has been appealed to the Court of the Federal Circuit, excuse me, and that they did issue an administrative stay. So that decision is currently on hold. It's worth noting while most other challenges to President Trump's tariffs have been channeled through the Court of International Trade and presumably are gonna be following that VOS selection sort of line of argument, although some of them have little distinctions that maybe will land in a different zone, at least one case is still live in another federal district court in the Northern District of California. That's California v. Trump. There may be other ones that I've missed. So it's possible we will get a third decision from a third jurisdiction that's gonna have a third appellate track that ends in the Supreme Court. So that's the lay the land for people. Let's talk about this first decision from Judge Contreras in federal court in D.C. and it's worth starting on this one because it gets at this tricky jurisdictional issue that is central to a lot of the debate that's happened in these cases so far, which is, is this the sort of challenge that should be brought in a federal district court or specifically in the Court of International Trade? Talk to us about that debate, Peter, and tell us where Judge Contreras came out on it and how persuasive you find it.
- [06:07]
Peter Harrell
Yeah, no, and I think it's a really interesting question because this is a kind of interesting area of law where the jurisdictional question and the merits question are actually quite closely related. And I, I should, before digging into it, I should, I should mention that I, I was involved as co counsel in a amicus brief by 148 House members that was filed in one of the CIT cases, one of the court of International Trade cases. So I, I do have some involvement, though not directly with any of the parties in any of the, in any of the litigation. The Court of International Trade is this specialty court that has been around in different forms for a number of decades. It has nationwide jurisdiction and nationwide exclusive jurisdiction over essentially custom statutes. The current jurisdictional statute for it, which was passed in the 1980s, provides it has exclusive nationwide jurisdiction over a bunch of named customs statutes. You know, things like the Trade act of 1974, you know, a whole bunch of different trade statutes, as well as matters arising out of those statutes, as well as any other statute that provides for tariffs or customs matters as a broad grant of jurisdiction and exclusive jurisdiction for matters that are related to customs and statutes provide for customs. Now, the kind of core legal question on the merits of, in all of these cases is whether IIPA, this 1977 emergency power statute, allows tariffs. Does it allow tariffs ever? Does it allows tariffs in some circumstances? And what we have seen is most of the plaintiffs bringing suit have been arguing, among other arguments, that actually, ipa, as a sort of textual matter, does not allow tariffs full stop. Now, if that is your position, that IIPA does not allow tariffs full stop, or if you were a court that found that IPA does not have to, does not allow tariffs, full, full stop, then the CIT would not have jurisdiction over it because it's not a customs statute. And so what we have seen the government do across all of these cases is essentially argue, well, no, of course, IPA allows tariffs. And so all of these cases should be heard in the citizens, which can then determine whether it allows these particular tariffs or not. And so the government had moved to consolidate all of the cases, moved to transfer all of the cases to the cit, and has been successful so far in transferring one that was originally brought in Florida and one that was originally brought in Montana to the CIT. It was not successful in transferring to the CIT the case that was brought in in D.C. the learning resources case, Scott, that you just mentioned and that we got an opinion on yesterday. And in that opinion, Judge Contreras found that ieepa, in light of kind of its text and history, does not allow for tariffs. And so he is, you know, authorized to exercise jurisdiction overhearing this case and to issue a preliminary injunction. One, one sort of point I would note, actually, in the preliminary injunction, I do think is important. And you note that there's going to be an appeal. Actually, the injunction in that case, in the D.C. case is limited to the two named plaintiffs. So it is. No, there was neither a request nor a grant of a nationwide injunction in that case. So Even if the D.C. circuit does not stay the injunction, that injunction would only apply by its own terms to the two educational toy importers that brought that case.
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Scott R. Andersen
So this is a really interesting question. I mean, we saw the District Court Judge Contreras reach this conclusion that IPA cannot authorize tariffs, period. And that's why the jurisdictional question became pretty easy. And we saw the Court of International Trade and VOS elections reach the opposite conclusion that it does or can authorize tariffs, and that's why it grants it jurisdiction. But there's a big gap between those opinions. Like, you could reach a conclusion where IIPA could authorize some tariffs, but not all tariffs or something that looks a lot like tariffs, plus a bunch of other stuff. I mean, IPA obviously is used for, among other things, economic sanctions, has been used for export controls in the past. Lots of potential applications. But depending on how you read the jurisdictional statute, which gives the CIT exclusive jurisdiction over matters arising from laws allowing for tariffs. In theory, you could read that. And I believe Judge Contreras even gets at this a little bit in his opinion. You could read that as saying all AIPA actions have to go through a cit because while it provides a lot of other things, it also provides for potentially tariffs. How do you think that breaks down? I mean, that'd be a big departure, we see an AIPA challenges traditionally go through federal district courts around the country, and that's been happening for 50 years since IPA has been passed at a pretty high volume. So that'd be a pretty big shift to shift all jurisdiction there. How do you think, you know, the Supreme Court or the Northern District of California, the next case, that court that may have to wrestle with this issue is going to kind of split that issue, unless they come into one end of the spectrum or the other in terms of what IEIPA authorizes on tariffs.
- [11:15]
Peter Harrell
Yeah, I think it will be quite interesting, you know, if the government is ultimately successful as these cases are appealed through the courts, if the government is ultimately successful in its argument that IEPA allows for tariffs, at least in some circumstances, whether or not all of the, you know, four executive orders have been challenged to date, at least in some circumstances, that would, as the plaintiffs and Learning Resources noted, and as we saw Judge Contreras get at, that would seem to mean that all of the sanctions designated individuals who are bringing challenges against their sanctions or other sanctions related challenges to sanctions related actions have to be brought in the cit, which would be a bit of an odd outcome because I've not done exhaustive research on this. But I suspect that no sanctions related challenges have been brought in the CIT to date because not to my knowledge, they've all been brought, as you note, I mean, all the ones I'm aware of, and there have been hundreds of them over the years. They've all been brought in either in D.C. because that's where the relevant regulatory agencies sit, or in, you know, whatever district the plaintiff bringing the challenge resides. And so you've seen them in California, you've seen them in Ohio, you've seen them in New York and New Jersey, you've seen them, you've seen them in D.C. you've seen them all over the place, but not, I think, in the, in the cit. And it'd be interesting to see if the, you know, CIT under the sort of government's theory that IEEPA provides for tariffs. And under the plain reading of the CIT's jurisdictional statute, it would sort of seem to suggest that what we would, would find is the CIT becomes the, you know, Court of International Trade and Sanctions challenges. And that will be an interesting outcome. I mean, I suppose it's possible that somehow, you know, the Supreme Court would, would or the appellate courts would, I suppose it's at least possible, as I think here, you know, would, would somehow split this and say that although the plain reading of the CIT's jurisdictional statute would suggest that he has exclusive jurisdiction over all matters arising out of statutes that provide for customs, conceivably maybe they'd read, well, where, where there's a non customs related challenge that could still be brought elsewhere, but that would not be the natural reading of the statute.
- [13:33]
Scott R. Andersen
Yeah, let's go to the statute arguments because they do blend together. I mean, the jurisdictional question kind of hinges on how you read the statute. And let's start with Judge Contreras. Because he reaches his conclusion based on one particular grounds of arguments, he does not reach other ones. He finds that adequate to grant a preliminary injunction. And we should know we're going to focus on the statutory arguments, which is for the purpose of preliminary injunction, was the likelihood of success. So he didn't technically reach a final conclusion on these, as most attorneys and frequent listeners of lawfare probably understand by the standards of prepliminary injunctions. Instead, he reached the conclusion that the plaintiffs were likely to be successful on at least this argument and also determined that they were going to face irreparable harm and other issues. Those other elements that come down with the fact that these businesses are all facing real hardships because of these tariffs, or at least claim to be, is going to be common across these cases. We're not going to dig too much into those. We're going to focus on the EBA based arguments. But just to get out there, we, we read the opinion. There are those parts of it that people can dig to and they want, but it's not the most interesting part of this. So let's focus on the statutory argument. For Contreras, this really came down to the statute. He didn't get into the constitutional arguments. He really didn't get into the tariff program specific sanctions, because of course we have sanctions against Canada, against Mexico, against China that have all been challenged and then we have the worldwide tariffs. So there's kind of four different tariffs programs, at least, that are being challenged under this set of litigation. He didn't get to any of those specifics. He said AIPA itself just does not authorize tariffs. Talk to us about his argument and how persuasive you found it.
- [15:05]
Peter Harrell
Yeah. So IPA, the statute was passed as an emergency powers statute, 1977. Nowhere in its text references the word tariff. It provides the President a broad range of authorities. They're codified in 50 USC 1702 to block property and to prevent and prohibit various kinds of transactions. And if you kind of read this dense paragraph in 50 USC 1702 that provides the government with. With authorities. The government's argument was that while the government's argument is that while IIPA does not expressly use the word tariff or tax or levy duties or the kind of other phrases you tend to see where there is a. A grant of a taxing or tariff power to the government, iipa, if you read through the statute, does give the government the power to regulate the import or export of any property in which a foreign national has an interest. And so it's sort of undisputed and has been done many times, that the government can use IIPA to impose a ban on imports of Russian oil. To give an example of something Biden did under IPA in 2022. So IEPA has been, in sort of plain language of the statute, would suggest it can prohibit the importation of various products from abroad. But the government's argument is that this phrase regulate the import or export of any property, regulate in this context includes a power to tariff or to tax or to assess a fee. That's essentially the argument Judge Contreras, and I think it's actually quite a strong argument. Judge Contreras found that, no, the power to regulate does not include the power to tariff or tax. And there are kind of a couple of arguments that he makes in the opinion. You know, one is kind of a plain language argument. You know, he looks at some dictionary definitions and those kind of things, and they does not have in the dictionary definitions, regulate does not appear to have a power to tax. There is also obviously case law, including some recent case law, looking at some things the Biden administration had done, that finds that the power to regulate and the power to tax are different under the law. And you can also think about that just in sort of a simplistic, without getting into the case law, a simplistic way. If the government's reading is correct, that the power to regulate includes the power to tax, that would seem to suggest, at least on a plain language reading, that, you know, any area where the government has the power to regulate would include the power to tax. So could the government tax pollution because it has the power to regulate pollution? Could it tax stock trades because the SEC act has the power to regulate stock trades? And Judge Contreras fundamentally concluded, kind of, given the textual nature, given the textual interpretation of IPA and also looking at its history, that this phrase to regulate does not include the power to tax, can include other things. You can prohibit importation. That's also separately provided in ipa. You could also envision non taxing kinds of regulation. Right. You could have time, place or manner restrictions or something like that. But he just found that government's argument that the power to regulate in this context includes the power to tax is not the correct reading of the statute. So Judge Contreras, because he simply finds the textual matter, the statute does not include the power to tax, he then doesn't have to get into are there distinctions between the tariffs on Canada over fentanyl, the tariffs on China over opioid and fentanyl production, and the tariffs on kind of the whole world over the trade deficit that Trump had declared in April? Because if IPA doesn't allow the power to tariff sort of full stop, it's immaterial to assess the differences in the different tariffs that were in fact applied pursuant to ipa.
- [19:12]
Scott R. Andersen
So I want to compare how Contreras approached this to how we saw the Court of International Trade, which is a three judge panel, so I'm not referring to a specific judge there, approach this and other statutory questions because they got into deeper, more layered analysis because they kind of laid up a number of arguments, the alternative, since they were going to summary judgment. But before I do that, let's address a bridging issue that they both asked to wrestle that fit into Contreras here, and that is this Yoshida opinion, which is really the only directly on point opinion we have coming out of a court that no longer exists, was kind of a predecessor of the Court of International Trade, a Court of Federal Claims, a different sort of statutory judicial body that fed up to the Federal Circuit at the time, if I recall correctly, feel free to correct me, which sanctioned a sort of tariff program imposed by the Nixon administration with some caveats, not wholeheartedly necessarily with a little careful language, but nonetheless did say we're not going to raise an issue or invalidate this at this particular point, talks about how Contreras deals with Yoshida and approaches Yoshida, which of course it's in a different posture of vis a vis because it is under the D.C. circuit for appeals. It's not necessarily bound by Federal Circuit precedent, although, you know, may well look to it as persuasive. Talk to us about what it does with Shushida. And that's a good bridge to jump over to the Court of International Trade's approach to this stuff.
- [20:35]
Peter Harrell
So let me, let me, Scott, begin by talking a little bit about the history of the Yoshida case and how we got here. So 1971, President Nixon pulls the US off the gold standard and is very worried about what is going to happen in currency markets and trade relations around the world when he pulls the US off the gold standard. So what he does sort of in the fall, late summer, early fall of 1971, when he pulls the US off like gold center, he simultaneously announces that among other measures, he is going to impose a 10% tariff on most imports. It's not actually 10% across the board. It's a pretty complicated tariff regime. It often gets summarized a 10% tariff, but it was quite nuanced and gave lots of different rates to lots of different products, none of which exceeded a 10% tariff surcharge. And that tariff lasted four months. After four months, the sort of global financial fiscal situation stabilized. Nixon withdraws that tariff. A Japanese zipper company called Yoshida, really it's US subsidiary, actually, if you have a zipper jacket or something with a zipper on it today, it almost certainly is made by Yoshida. Yoshida today, now called YKK, makes like 70% of the world's zippers. So you probably have products that are made by the company at issue in this case brings a suit because it wants to get its tariffs back. You know, it's not while the tariffs are in place, the tariffs go away after four months, but they want a rebate of their, of their tariffs. When Nixon announced these 10% tariffs, he'd cited various inherent executive authorities that they realize in litigation aren't going to be upheld. So the Nixon administration begins in litigation to cite this 1917 act called the Trading with the Enemy act, which is IPA's predecessor statute and which has language in it that's similar to IPA. And in 1975, you know, four years after the tariffs have come and gone, a federal court says, well, yes, this Trading with the Enemy act in that case, it has the same language about regulating importation of property. That language can be used to sustain this 10% tariff. And the language in the Yoshida court says, well, although it could be used to sustain this 10% tariff, the Yoshida court also sort of expressly says things like that doesn't mean it could be used to sustain an unlimited tariff or other tariffs. We're limiting it to this particular tariff type of tariff. So this Yoshida case, where language that is substantively identical to the relevant language in IIPA was used to uphold this 10% four month tariff, is obviously relevant to the litigation we're seeing today and is core to the government's argument that regulating the importation of property includes the power to tariff. The way in which the D.C. district Court Judge Contreras distinguishes this is by looking both kind of the plain language today, but also by looking at some of the history that happened after, well after this Nixon tariff. And in particular by noting that in 1974 Congress enacted a separate statute now known as Section 122. It's Section 122 of the Trade act of 1974 that gives the President the authority to impose tariffs for up to 150 days of up to 15% to deal with balance of payments issues. So Congress sort of seemed in 1974 to say, hey, without taking an opinion on the legality of what Nixon did at the time, enacts a separate statute that gives the President a kind of time limited and rate limited authority to impose tariffs. And so what Contreras found is essentially you look at what Congress did when it adopted IEEPA in 1977, knowing it had passed this separate statute in 1974 to deal with the Nixon tariffs. Contreras kind of looks as well, looking at that history when Congress adopted IIPA language that looks the same as the TWEA language. But you've had this other statutory intervention. That doesn't mean that in IIPA Congress adopted the power to tariff that the Yoshida Court had upheld in 1975.
- [25:12]
Scott R. Andersen
Yeah. That it would have been essentially reversing what it had just done to correct some of the TWEA action. Really interesting sequencing and statutory interpretation approach in that sort of thing. So turning out of the Court of International Trade, we see them embrace, I think, a similar line of argument, but among many others, in part because they are reaching summary judgment. They are deciding with finality. Hey, we are getting rid of this case or at least bumping up to the appellate Court. We think we can come out and reach final resolution on this. They lay out a number of different arguments, statutory and otherwise, as to why IEEPA doesn't authorize exactly what the President is reaching right now or can't authorize in terms of constitutional arguments. Talk to us a little bit about other statutory arguments that they toy with. What do they do that builds on the contraris approach?
- [26:00]
Peter Harrell
To start there, There is an important difference because I would say, you know, if you read the CIT opinion, the CIT holds open the possibility that IEEPA may endorse tariffs of some kind. It doesn't say what those are, but it clearly holds open the possibility that IEEPA may endorse tariffs of some kind. Now this is where the jurisdictional question other way in which the jurisdictional question becomes interesting because if the C found that IEEPA never endorsed tariffs. Presumably the CIT would have had to give up jurisdiction over this case because it's not a statute that provides for, you know, customs. And so if the, if the, the CIT is going to render a substantive opinion in this case and not just say we don't have jurisdiction here, it presumably would have to, given its jurisdictional statute, be of the view that at least in some circumstances, IPA would allow for tariffs. And so the CIT doesn't come out in exactly the same place that Contreras does. Instead, it takes a slightly different approach. And first of all, it differentiates between what it characterizes as kind of the Liberation Day or trade deficit tariffs, the tariffs that Trump announced on April 2 that were intended by their own terms to address the US Persistent trade deficit, and what the CIT characterizes as the trafficking tariffs. These are the tariffs that are on Canada, Mexico and China that are, by their terms, dealing with America's fentanyl and opioid crises. The Canada one is over fentanyl, China's over opiate. There's some differences. The CIT kind of lumps these together as the trafficking tariffs for those three executive orders. And the citizens comes to different conclusions for why the trade deficit tariffs and the trafficking tariffs are not authorized by eapa, rather than one finding across two of them. So what the CIT finds, and this is where you see the bridging between the district court opinion and the CIT opinion with respect to the trade deficit tariffs. What the CIT basically does is it looks at this section 122, this thing that Congress had passed in 1974 after the Nixon tariffs. And the CIT basically holds that given the history of 122 and Congress creating this provision of 122 to deal with balance of payments type issues. The CIT basically concludes that given 122, IEEPA tariffs can't be used to address the trade deficit or balance of payments issues. If the President wants to address use tariffs to address trade deficit or balance of payments, he has to use Section 122, which puts limits both on the duration of the tariffs 150 days and also a rate of 15%. So it finds that the trade deficit tariffs are unlawful because IPA does not allow tariffs for the purposes of the trade deficit. Then it looks at the trafficking tariffs. And it kind of has several different concerns with the trafficking tariffs. But one of them that I think is a sanctions practitioner is quite interesting is IIPA has a requirement that the measures imposed be designed to deal with the threat that AIPA action is intended to do and where this is relevant. So IEPA requires the President declare a national emergency and then he can deploy various powers to deal with an unusual or emergency, an unusual or extraordinary threat for which a national emergency has been declared. So he has to declare a national emergency, and then the powers have to be deployed to deal with this unusual or emergency or extraordinary threat. And the trafficking tariffs are to deal with the drug, sort of the drug crisis. And the court basically held that tariffs on basically all Canadian and Mexican and Chinese imports are not designed to deal with the drug threat. So it sort of seems to imply if you'd had tariffs on packages that contain drugs, presumably that would have been upheld. But where you're tariffing lumber or whatever else is coming in from Canada or Mex or avocados like that doesn't deal with the declared threat, which is a sort of drug trafficking threat, and so finds all of all three of those executive orders unlawful.
- [30:49]
Scott R. Andersen
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- [36:44]
Scott R. Andersen
So that's obviously a holding, particularly on those trafficking trafficking executive orders that has potential implications for other applications of epa. And I want to circle back to that because that's one of those points that I think is going to give some sanctions practitioners heartburn potentially, particularly on the government side. Before we do that, though, let's go to a dog that didn't bark. So as you noted, the Court of International Trade based part of its analysis on the fact that there was an adequate nexus between the national emergency being declared and the actions being undertaken here. The tariff specifically for the trafficking statutes didn't have to get there for the worldwide tariffs. The other thing that we didn't see happen, although it was on our kind of theoretical matrix of possibilities, is a challenge to the national emergency itself. The idea that these are national emergencies of the sort anticipated by the National Emergencies Act. And that is something we see. I've seen commentators take issue with, including in some of the writings in Lawfare on this issue over the last few months, particularly in the regard to worldwide tariffs, because there was this idea that this balance of this trade imbalance is something that's been with us for decades and is actually by some measures gotten better in recent years than it was just a few years ago, among other arguments, why it's that doesn't really qualify as an emergency of the sort the National Emergencies act and IEVA anticipates. Why didn't that dog bark? Like why didn't we get that addressed? Or was there more being talked about this than I read on my initially fairly fast read of this opinion before you got a chance to talk about it? I didn't see it in there. And is there more potential for that to be an issue either when we get to the actual merits in Learning Resources, the DDC case or in the Northern District of California case that's still forthcoming?
- [38:28]
Peter Harrell
Yeah. So I think there's in some sense a simple reason that you didn't get much of a ruling on this matter, which is that in the CIT case, which was actually an opinion that was both in the VOS Selections case and also a case brought by the state of Oregon and 11 other state attorneys general, the parties in that case didn't make much of a deal about whether the trade deficit counts. It can be a national emergency emergency for the purposes of the National Emergencies Act. And indeed at least the Oregon plaintiffs expressly said they were not challenging the declaration of the national emergency at oral arguments when they were asked that. Now, the reason that the plaintiffs have not made much of a deal of that is that there is quite a bit of case law out of a couple of different appellate courts holding that declarations of a national emergency pursuant to the National Emergencies act are non justiciable political questions. And I suspect I don't know exactly what the parties here thought in their argumentation, but I suspect, and had I been advising one of the parties, I would have said, look, overcoming that precedent, that the declaration itself is a national is a non reviewable political question is going to be very hard. And so you're not going to find a very fruitful line of argument there. I do think there's another kind of closely related dog that didn't bark that I think, you know, particularly with the trade deficit, might be might be something we see in appeals in which the parties did argue in the case. It just didn't come out much in the opinion. As I said, IPA requires that the threat in addition to a declaration of a national emergency, the threat has to be unusual and extraordinary. And there's not been as much clear cut precedent. That unusual and extraordinary is a non reviewable political question, non justiciable political question. And I think you could see as these cases go forward and you have seen some of the Parties in different cases make the argument that at least with respect to the trade deficit, which the US has run every year since 1976, notably the year before Congress passed IPA. Every year since the year before Congress passed IPA, the US has run a trade deficit is not an unusual threat at the very least in the sense of like unusual would suggest it's not, you know, plain language would suggest it is not something that is usual. And the trade deficit in the US context appears to be usual. And then as you say, Scott, actually as a percent of GDP, the trade deficit peaked in 2005 and is actually today maybe just over half what it was. Again as a percent of GDP, absolute dollars, it's larger, but as a percent of GDP is just over half what it was in 2005. So I think we may see this argument go forward, but I think the courts didn't get into it in part because they just found these other bases more compelling, you know, as they were thinking about how to rule on these cases. That argument would also, I should also add, like that argument, unusual and extraordinary. I think if I were litigating these cases, I would only attempt to make that argument on the trade deficit. I think you would be very hard pressed on the trafficking executive orders to argue that the fentanyl crisis, opioid crisis, you know, is not an unusual and extraordinary threat. In part because if you look at the something north now of 70 instances in which presidents have invoked IPA to impose sanctions, you know, many of them are on things like cyber hacking and drug trafficking generally and you know, other kinds of transnational crime, corruption, you know, other threats. It's hard to say, well, if the, you know, if these other threats meet the standard, it's hard to say that fentanyl trafficking doesn't also meet the standard.
- [42:37]
Scott R. Andersen
Absolutely, yeah. I mean, a lot of those emergencies have also been around for decades at a time, making the unusual extraordinary argument a little tricky and worth noting for folks, in case you were wondering, the National Emergencies act, no statutory definition of what an emergency is. That's part of the reason why it's such an open ended question. Lots of procedural requirements, but doesn't really define it further. Although IPA does require a nexus to threat to the national security or emergency of the United States. So the other line of argument that we expected and we did see in this court of national trade argument and was a big focus for at least some of the litigants, Ilya Soman, who helped run a legal organization and wrote about this case for us for Lawfare, as somebody representing The OS selections, the name party, if I recall correctly, I believe is who he was representing. Really hit this argument in his piece for us on Lawfare and was a big focus of their briefing. Is the constitutional question. This idea that I eapa, if you read it to extend so broadly as to some of these tariff actions, particularly the worldwide tariffs, it raises big questions under the non delegation doctrine, this idea that the Constitution gives Congress only a limited authority to delegate things that are poorly within its authority, like the regulation of foreign commerce, which this clearly is, and that while it can substantially delegate that authority to the President, it has to give some guidance on how that authority is to be used or it becomes unconstitutional idea which it's worth noting was pretty much dead for most of the 20th century, at least directly, kind of indirectly informed statutory interpretation, but wasn't directly invoked, but is now having a new moment in part because it's being revived through the major questions doctrine, at least through some readings of that doctrine. This idea that if the executive branch is using a statute to do something really extraordinary in a way that wasn't clearly anticipated by Congress, that is a reason to maybe second guess that interpretation of the executive branch is subjected to more scrutiny. That's popular with the Roberts Court, with a number of the right leaning justices, most notably those appointed by President Trump on the court as well as Chief Justice Roberts. So talk to us about this constitutional argument. It's interesting how this came out and worth noting. The court didn't have to reach this right. It could have disposed of this matter. And frankly, most of the time when you're dealing with federal judges, I would say lower of lower courts, you expect them to avoid the constitutional issues if they can. That's kind of the norm assumption, this norm of constitutional avoidance. But the Court of International Trade didn't do it. It ran right into it. So talk to us about this constitutional holding and kind of why they decided to go so far as to reach it.
- [45:02]
Peter Harrell
Yeah, and I think this is going to be, I think the constitutional questions are going to be among the most important questions, particularly if, and I think almost surely when this lands in front of the Supreme Court probably sometime in the fall. Because as you say, Scott, there has been a keen interest both on the part of some conservative jurists and also on the part of a number of lawyers in reviving this non delegation doctrine, which as you suggest has been dead for many decades, but the core of which is that Congress, if it is going to delegate its powers to the present, has to provide an intelligible principle and some sort of outer limits on what those powers are. And then I think there is, if you read some of the conservative scholarship on this, even when you have an intelligible principle, and so parameters are actually probably still also substantive limits on how much power can be delegated from Congress to the executive branch. And as I actually start before I talk about what the CIT did is as you'll recall, when we, we go to the, the predecessor, this is the Yoshida court, Yoshida upholding Nixon's tariffs in 1975. You know, that court addressed it in what, you know, maybe you could say is dicta in the sense of it said, you know, non delegation doctrine could apply to some kinds of tariffs. It just doesn't apply to these kinds of tariffs here, which again, back then had been 10% and lasted for four months. I think part of the reason the CIT was getting into the constitutional question is because CIT here, unlike the district court, I think, clearly felt itself bound by Yoshida. And in fact, at oral arguments in one of the cases, I think it was Judge Rustani, one of the three judges on the panel, sort of got into a back and forth with the government's lawyer, which Judge Rustani was basically arguing, well, Yoshida has this language about non delegation in it for sort of unlimited tariffs. And if we at the CIT are bound by Yoshida that IIPA should allow tariffs in at least some circumstances, shouldn't we also be bound by this idea in Yoshida that it wouldn't allow unlimited tariffs because that would violate potentially the non delegation doctrine at which the government's response, well, that's really just dicta. You don't need to pay attention to, you know, that part of Yoshida. And I think what you see the CIT doing here, all three judges, not just Judge Rustani, it was a per curiam opinion joined by Rustani Katzman and Tim Rife. I think what you see is all three of them sort of saying, well, look, Congress could not with ieepa, simply have delegated all of its tariff authority to the President to basically do any tariffs at any rate on any product in any country for any duration. Which is essentially what the government is arguing AIPA lets it do because that would violate the non delegation doctrine because there's no like intelligible limiting principle for the deployment of these tariffs. So, so that's kind of the, the legal argument. They're looking at what happened to Yoshida. They're looking at some of the old, old cases as well, as you say, the kind of recent resurrection of the major questions doctrine and finding aipa, if it were a going to allow tariffs sort of at any rate for any time against any country, any product, would violate non delegation doctrine. And I think this will be a major issue, as I say, as it goes through appeals because I think for jurists and lawyers who would like to revive the non delegation doctrine, if you're a Supreme Court justice who wants to give an opinion, a substantive opinion on the non delegation doctrine, what can Congress delegate and what can it not delegate? This would be an appealing case to do it.
- [48:59]
Scott R. Andersen
Yeah, absolutely. So and that really gets us to where we go next. We know where these two courts have ruled on this. We already know this dispute is going to go up two lines of appeal, one to the D.C. circuit, which we're waiting to hear whether they're going to issue an administrative stay or other stay. And there, I should note, this is going to go because they filed before the end of the month to the current May motions panel, which I believe is Judges Henderson, Judge Walker and Judge Childs, a 2 to 1 Republican appointee for the third, third month in a row, which is otherwise a court where it's kind of the ratio goes the other way, 2 to 1 Democratic to Republican appointees, maybe the next panel. I don't know which way that cuts. A lot of the assumption is that that cuts in favor of the administration. I'm not sure that's true on this particular issue set, but we'll have to wait and see. But regardless, that is one panel that's going to be waiting on the Contreras opinion weighing in on that, potentially staying it right now. That's the thing stopping the application of the tariffs. And then we have the CIT opinion going to go to the Federal Circuit. Very interesting Federal court, where notably, which I did not realize until I looked into it, actually doesn't have a single Trump appointee on it. Several Republican appointees from prior administrations, but no Trump appointee from the first term or the second term now. So really, really interesting there. Although it's worth noting the Trump administration strategy in all these cases has been to try and channel cases into the Court of International Trade, which goes to the Federal Circuit, I'm guessing, because they at least had that Yoshida opinion they could hang their hat on, but obviously didn't work, at least at the CIT level. Where do you think this is going to go? And it's worth noting, by the way, we have the Northern District of California, Mike, yet get the 9th Circuit involved on another level of appeals. Is this something that inherently actually has to go to the Supreme Court, particularly because of this jurisdictional divide where the two opinions are mutually exclusive of each other, at least if you read them in a particular way, or read, I should say, the underlying jurisdictional statute in a particular way, does the court at least have to clarify that issue? Or is this something particularly where both circuit courts come out contrary to the administration, even maybe on separate, slightly different grounds, they're not going to feel obligated to either take it up or to resolve those sorts of internal tensions between the two opinions.
- [51:06]
Peter Harrell
Yeah. So a number of thoughts on that. So first, Scott, I think that your point on the government wanting to consolidate things in front of the Court of International Trade, I think if you're government, you almost have to. Right. Because you are arguing authorizes tariffs and the CIT has exclusive jurisdiction over over statutes and authorized tariffs. Let's put aside the sanctions. Oh, what are they going to do with sanctions? You know, cases going forward. But, but at least, you know, for the purposes of tariffs, I think you have to push to consolidate them in front of the cit. So I didn't really read anything into that other than that their, their argumentation meant they had to push to consolidate them to the cit. It is interesting you think about the partisan breakdown of the judges. I don't think that this particular issue has a clear overlay with kind of Democratic versus Republican appointed judges. I think this is an issue where you can see potentially more Democratic judges wanting to constrain this administration, but also where conservative jurists have a long history of thinking that there should be constraints on the exercise of executive power here. And I'd also note that the CIT panel was a George W. Bush appointee, an Obama appointee, and a Trump appointee. And so you had a bipartisan panel including a Trump appointee on it. And I thought it was interesting on that. Last night, the president had a very lengthy social media post complaining about the CIT opinion. But much of his complaint was how he'd been led astray on his appointments by Leonard Leo in the Federalist Society and how it was terrible that, you know, the Federalist Society had been advising him on judges.
- [52:58]
Scott R. Andersen
It was a heck of a truth. I will say. I did not see that one coming. This was not on my bingo card for the show.
- [53:03]
Peter Harrell
That was really quite something. He also had, like, interesting theories on the separation of powers where he said that if this opinion is left to stand, it would gut presidential power. And I think all of us have historically thought that Article 1, Section 8, which provides Congress the power to impose theirs, is a congressional power that has to be delegated. And we're just arguing over did Congress in fact delegate it and could they delegate it? Trump seems to think that the tariff power is a presidential power. But Trump has plenty of his own idiosyncratic views about, about the law. But, but, but be that as that may, I think it is virtually impossible to see a scenario in which this does not land before the Supreme Court. I mean, I suppose conceptually, you know, you could see it not landing before the Supreme Court either, because multiple appellate courts come out against the administration even, and even if they are on slightly different grounds because the end result is the same, the court could decline to take it up. I could also see a scenario where if the appellate courts end up all favoring the government, maybe the Supreme Court decides, you know, not. I mean, if we get, you know, reversal of the CIT at the appellate level, we get reversal of the D.C. district Court and the D.C. circuit, like maybe the Supreme Court. But that doesn't seem very likely to me. And I think even if you did have unanimous appellate, unanimous circuits, and even if the reasoning was largely aligned, as this kind of goes through at the circuit level, the reasoning aligns. I think this is one the Supreme Court's going to want to take up. Right. Because it is such a, an important question. For the contrary, I think they're going to want to, to take it up. So I think this will land in front of it in terms of what sort of the posture that gets us there. Right now, the cit, you know, the case has been appealed to the Federal Circuit. As you noted, there's an administrative stay. The parties have arguments on the administrative stay due on the 5th for the plaintiffs and on the 9th for the government. And I think we will, I think we will see the Federal Circuit deal with this case quite quickly, and we saw the CIT deal with it quite quickly. I think we'll see the CIT deal with it quite quickly. I think everybody, all the judges understand the importance of this case, and so I think they have an incentive to move it. There's also no factual dispute really on any of this. Right. I mean, it's purely a matter of statutory interpretation. You know, you could have some arguments around preliminary injunction. You know, had the CIT granted preliminary injunctions rather than summary judgment, maybe you'd have some disagreement over whether the preliminary injunction standards. This is a summary judgment decision. It's not a preliminary judgment. There's really no Factual disagreement for the purposes of summary judgment. So it can all be briefed quite. You don't need fact finding. It'll be briefed quite quickly. So I suspect, I mean, I've noticed. Talked to any of the litigators yet on this in the cases in the Federal Circuit? I suspect we'd have a decision in the Federal Circuit, you know, certainly by mid late summer and then, you know, it would go up from, from there.
- [56:27]
Scott R. Andersen
Yeah, absolutely. And worth noting when it comes to granting cert, where the executive branch asks for things that in case of a national security balance, which this certainly does, even though we think of it as a tariffs trade case, 100% record of the court actually granting cert. So if the Trump administration wants them to take up this, if they lose at the Federal Circuit, which seems certainly plausible, then the odds of it increases significantly of them taking up.
- [56:49]
Peter Harrell
Yeah. To your point on does it seem plausible to lose the Federal Circuit? I, you know, who knows, right? I mean, if I were a bet, if I were going to bet on this case, I would Bet that the CIT's ultimate outcome is upheld. Like, it'll be interesting to see if the Federal Circuit comes out a little bit different on the reasoning, even if it reaches the same, the same ultimate outcome. That'll be an interesting thing to watch. But it does seem to me more likely than not that the Federal Circuit will uphold the CIT's ultimate order as this goes forward. And I got a couple of questions yesterday. Obviously saw in the news there is this administrative stay. I got a couple of questions like, well, does that mean the Federal Circuit might be skeptical of this? I don't read it that at all. I read that as simply, you know, they understand this is an important and weighty case. They want to have a chance to hear the arguments on it before the CIT's judgment comes into force on a nationwide basis. I don't read anything into it. The analogy I kind of see is actually when the case was first filed, when the first VOS case was filed in front of the cit, the CIT denied a request for a temporary restraining order, basically just on the grounds that, well, these guys, these particular plaintiffs, couldn't show they were going to suffer irreparable harm, you know, in a couple of weeks that it was going to take to hear this case. And at that time I got some questions about, well, does a denial of the TRO mean anything? It clearly did not. I similarly expect the administrative stay. I don't read anything substantive into the administrative stay.
- [58:28]
Scott R. Andersen
Yeah, I think, I think that, I think that's right. That makes a lot of sense. And it was actually a notable distinction between the plaintiffs and learning resources where the court did find irreparable harm. They specifically argued we're going to have to shut down like we may not exist as an entity if we have to live through these tariffs much longer. And that definitely entered in, I think, to Judge Contreras reasoning certainly for the PI. So before we part, I want to dip back into your experience as a sanctions practitioner and a broader IPA practitioner, somebody who's looked at how IIPA is used in a lot of other contexts because we have been looking at this as one particular lens of tariffs. But of course, holdings regarding IEIPA are going to have broader ramifications. I'm curious whether a, any of what either court has done gives you some heartburn as somebody who's represented the executive branch, thought about policy from the executive branch's perspective and is, I think, otherwise sympathetic often to the executive branch's need to be able to use authorities in ways to advance policy interests, even if there might be some limits on that. Do parts of this give you heartache? And are parts of it something that on more scrutiny by the appellate courts, by additional briefing by amicus and other people who, although there are plenty of amicus already, but other people getting involved in this case, if they pull in more of the sanctions context, may undermine some of these arguments. One point of tension that jumped out to me, which I'll just put before you, is this argument about the Trade act of 74 impacting the interpretation of IPA and basically an assumption against redundancy. That's not something we've seen actually applied in the IPA context and other context. You think about the terrorism sanctions context already, Obviously Congress enacted the Foreign Terrorist Organization regime, which allows for the designation and position of sanctions on terrorist groups in 1998 as part of the Anti Terrorism Effective Death Penalty Act. But that did not stop subsequent presidents from enacting not one, but actually two separate terrorism related sanctions regimes that actually are applied totally coincident with the FTO regime alongside of it in current practice. I don't think that was always the case, but it is now, at least for organizations that qualify as FTOs. A Trade act of 74 type argument actually could be a problem in the terrorism context. I don't know if any plaintiffs made that argument when they were challenging that regime, particularly after 9, 11 when we had that whole wave of cases. And I have to go back and look, it very well might have, because a lot of those were very buckshot challenges raising all sorts of issues. But I'm just curious, that jumped out as me as man, this argument makes sense in this context, but it's harder to reconcile with our practice with AIPA in other contexts. Do other points like that jump out? Is there a way to reconcile them that's easier in your mind? I'm just kind of curious what this means for sanctions practice, broader AIPA practice, and how that broader practice may yet bear into this case in ways we haven't seen yet.
- [61:05]
Peter Harrell
Yeah, well, so maybe I'll start with the Contreras opinion in dc. You know that IPA as a sort of textual matter doesn't authorize tariffs. If that is the way in which the this case ultimately lands. You know, circuit courts and the Supreme Court ultimately resolved this case on that grounds, I see almost no impact on sanctions cases. Right. We haven't used tariffs Under IPA since 1977 until earlier this year. And reading tariffs out, I think has really almost no impact on sanctions. I do see if the CIT's reasoning is ultimately upheld like if we, if we see grounds on, if that reasoning ends up being the grounds on which the ultimate opinions are formed. I do see at least two areas in which sanctions practitioners could be impacted. One is the one, you know. Right. And I think that would, that would probably be limited in the terrorism case, although could also be limited in some of the drug cases. Right. Congress passed Kingpin Act. I mean, you know, you could, you could, you know, the sort of IEEPA cannot be used for, to impose sanctions or to impose measures where Congress has adopted a separate authority arguably could be read across a couple of different programs. I think you probably, practically speaking wouldn't have as much of that risk on like where Congress has adopted country programs, whether it's Iran or some of these other ones. Because where Congress did that, they so often incorporated past IPA executive orders and built on them and referenced ipa. I think that probably wouldn't be an issue. But I think conceptually you could start seeing some arguments where Congress has enacted separate programs challenge, you know, to, to target non state actors. It'd be interesting to see where that plays out. I agree with you. I don't remember when I, when I've read the cases challenging the 911 designations, and I haven't read those in the last couple of months, but when I have read those, I don't remember these arguments being raised, but certainly I could see it going forward. The other one that I've been thinking about quite a bit reading the CIT opinion is the CIT's view that these tariffs targeting, you know, most imports from Canada, Mexico and China aren't dealing with the declared unusual and extraordinary threat of drug trafficking. You know, and, and, and this comes against a backdrop where the government had argued, well, what the dealing with requires is, you know, or one way to address the dealing with requirement is as long as the measure is getting leveraged to solve the problem that is dealing with it. And what Trump is doing is getting leveraged to get the Canadians to do something. And that, of course, is something that we have done in sanctions quite often. You know, we will sanction some part of the Russian economy that is only very tangentially related to Russia's war machine on the grounds we're trying to get some leverage over the Russians to put pressure on them to do something. And if you saw court start taking this dealing with argument that we see in holding, that we see in VOS selection seriously and applying it to other circumstances, you could begin to see some constraints on how the government thinks about sanctions as a leverage generation tool beyond just kind of we're going to sanction the particular bad actors that are directly involved in the threat we're trying to deal with. Now, I think as somebody who's drafted IEEPA executive orders and that kind of thing, you can think of kind of creative drafting solutions how you could define the threat in a way that let you use sanctions as leverage. And so maybe there'd be kind of ways that you could draft around or partially draft around judicial requirements in this era. But I think we'd have to think about it, I guess, final sort of historical point for your listeners. You know, it's interesting for those of you who work on sanctions, listen to this podcast. Over the last 15 years, there has been an increasing reliance by the government on what we call status based sanctions, where the, the legal basis for sanctioning somebody is that they are a Russian government official or an Iranian company that operates in the Iranian energy sector, rather than trying to show some linkage as a legal matter between the person you're sanctioning and some bad act. And that shift to status based designations was really driven by European litigation in the 2000, late 2000s and early 2000s, where European courts were saying, no, no, you have to, for European sanctions, you have to show a kind of direct nexus between, you know, the individual doing some bad act. And the solution was, well, just stop drafting, we'll stop sanctioning them for doing bad acts. We'll start sanctioning them for, you know, characteristics about them. And, you know, and now Americans have adopted that too.
- [66:23]
Scott R. Andersen
Well, we will see how that fares under whatever standard we may see come out of this process. Needless to say, there are a lot of open questions still. This is not the last word in this dispute. We are going to see at least another round, probably another two, maybe even three rounds of litigation on this matter or more. And so we'll have opportunities to come back. But until then, we are out of time today. Peter Harrell, thank you for joining us here today on the Lawfare Podcast.
- [66:46]
Peter Harrell
No, thank you, Scott.
- [66:47]
Scott R. Andersen
It's been a pleasure. The Lawfare Podcast is produced in cooperation with the Brookings Institution. You can get an ad free versions of this and other Lawfare Podcasts by becoming a Lawfare Material supporter at our website, lawfairmedia.org support. You'll also get access to special events and other content available only to our supporters. Please rate and review us wherever you get your podcasts. And look out for other podcasts including Rational Security, Allies, the Aftermath and Escalation, our latest Presents podcast series about the war in Ukraine. In addition, check out our written work@lawfaremedia.org the podcast is edited by Jen Patch and our audio engineer. This episode was Kara Schillen of Goat Rodeo. Our theme song is from Alibi Music. As always, thank you for listening. Think advertising on TikTok isn't for your business? Think again. We've generated over a hundred thousand leads which has converted into over 40,000 sales for our pet insurance policies. My name is Trey Farrow. I am the CEO of Spot Pet Insurance. TikTok's smart AI powered automation takes the.
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Peter Harrell
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