Federal District Court Issues Another Ruling Against Trump's IEEPA Tariffs

Yesterday, the US Court of International Trade (CIT) issued a unanimous ruling in the case against Trump’s “Liberation Day” tariffs filed by Liberty Justice Center and myself on behalf of five small businesses. The ruling also covers the related case filed by twelve states led by Oregon (those plaintiffs also won). See my summary and discussion of the CIT decision here. Today, we have another federal court decision against the Trump’s attempts to use the International Emergency Economic Powers Act of 1977 (IEEPA) tariffs: Learning Resources, Inc. v. Trump.

It was issued on  by Judge Rudolph Contreras of the federal District Court for the District of Columbia (DDC), in Unlike the CIT ruling, it applies only to tariffs imposed against the two toy manufacturers that brought the case. But it is notable that Judge Contreras concluded IEEPA doesn’t grant the president the power to impose tariffs at all, thereby going further than the CIT decision does. If it did grant the sweeping authority claimed by Trump, Judge Contreras, like the CIT panel, noted that would be an unconstitutional delegation of legislative power, and “render IEEPA unconstitutional.” While the impact of the DDC ruling is very limited, it further bolsters the case against Trump’s abusive tariff power grab.

In our case, we too argued that IEEPA doesn’t grant any power to impose tariffs at all. The CIT decision equivocates on that issue, limiting itself to holding that IEEPA at least doesn’t grant the sweeping virtually unlimited power claimed by Trump, and necessary to justify the “Liberation Day” tariffs. By contrast, Judge Contreras concludes that IEEPA doesn’t grant any tariff authority of any kind. Here is an excerpt from his ruling:

Since the Founding, the Constitution has vested the “Power to lay and collect Taxes,
Duties, Imposts and Excises” with Congress. U.S. Const. art. I, § 8, cl. 1. The President has no independent discretion to impose or alter tariffs. See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952). Any Presidential tariffing authority must be delegated by Congress….

IEEPA does not use the words “tariffs” or “duties,” their synonyms, or any other similar terms like “customs,” “taxes,” or “imposts.” It provides, as relevant here, that the President may, in times of declared national emergency, “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit” the “importation or exportation” of “property in which any foreign country or a national thereof has any interest.” 50 U.S.C. § 1702(a)(1)(B). There is no residual clause granting the President powers beyond those expressly listed. The only activity in Section 1702(a)(1)(B) that could plausibly encompass the power to levy tariffs is that to “regulate . . . importation….”

The Court agrees with Plaintiffs that the power to regulate is not the power to tax… The Constitution recognizes and perpetuates this distinction. Clause 1 of Article I, Section 8 provides Congress with the “Power To lay and collect Taxes, Duties, Imposts
and Excises.” Clause 3 of Article I, Section 8 empowers Congress “To regulate Commerce with foreign Nations.” If imposing tariffs and duties were part of the power “[t]o regulate [c]ommerce with foreign [n]ations,” then Clause 1 would have no independent effect. As Chief Justice Marshall put it in an early leading case, “the power to regulate commerce is . . . entirely distinct from the right to levy taxes and imposts.” Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 201 (1824)….

“Tariff” and “regulate” also take different plain meanings. To regulate something is to
“[c]ontrol by rule” or “subject to restrictions.” Regulate, The Concise Oxford Dictionary of Current English 943 (6th ed. 1976); see also Regulate, New Webster’s Dictionary of the English Language 1264 (1975) (“to govern by or subject to certain rules or restrictions”)…  Tariffs are, by contrast, schedules of “duties or customs imposed by a government on imports or exports.” Tariff, Random House Dictionary of the English Language 1454 (1973). To regulate is to establish rules governing conduct; to tariff is to raise revenue through taxes on imports or exports… Those are not the same….

Judge Contreras has several additional justifications for his ruling on this point that are too long to excerpt here. But they are good points, as well.

Like the CIT decision, Judge Contreras argues that interpreting IEEPA to grant the sweeping authority claimed by Trump would render it unconstitutional, which is an additional reason to rule against the administration:

Defendants’ interpretation could render IEEPA unconstitutional. IEEPA provides that the President may “regulate . . . importation or exportation.” 50 U.S.C. § 1702(a)(1)(B). The Constitution prohibits export taxes. See U.S. Const. art. I, § 9, cl. 5 (“No Tax or Duty shall be laid on Articles exported from any State.”). If the term “regulate” were construed to encompass the power to impose tariffs, it would necessarily empower the President to tariff exports, too. The Court cannot interpret a statute as unconstitutional when any other reasonable construction is available. See Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 563 (2012).

I think Judge Contreras’ analysis here is compelling, and other judges should follow it.

Judge Contreras’ decision is in large part a jurisdictional ruling on whether cases challenging the IEEPA tariffs must be filed in CIT (he concludes they need not be, because IEEPA doesn’t authorize tariffs). I will not try to assess this jurisdictional issue here. I will only note I believe CIT does have jurisdiction over such cases (which is why we filed our case there), but I have no strong view on whether CIT’s jurisdiction is exclusive, as the Trump Administration has argued. As Judge Contreras notes, two other district courts have ruled that it is indeed exclusive, and ordered the relevant cases to be transferred to CIT.

It’s possible that an appellate court will ultimately overturn this decision on the jurisdictional issue. But his substantive reasoning is still strong, and deserves to be adopted by other courts, even if it is not a binding precedent.

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