After months of rigamarole beginning with the April 2 threat of widespread “Liberation Day” tariffs, President Donald Trump’s administration finally levied import taxes against more than 70 countries on Thursday. Now it’s up to the courts to decide whether those tariffs will stay in place.
Trump launched his assault on global trade using a 1977 law called the International Emergency Economic Powers Act, or IEEPA, because he claimed America’s trade deficits constituted a national emergency. U.S. tariffs on other countries now range from a high of 41% levied against Syria to 10% for nations including the United Kingdom. Including the hazy handshake trade deals announced by the administration, about 90 countries now face import tariffs from the U.S. with the new 18.6% average tariff rate at its highest since the Great Depression.
And for what?
The Trump administration claims the decades-long retrenchment of the U.S. manufacturing sector, so-called counterfeit goods imports laced with fentanyl, and the nation’s reliance on foreign supply chains constitute a threat to national security. Experts told TPM the president is completely off base — “You can’t make sense out of it because it does not make sense,” said economist C. Fred Bergsten. Already, Trump’s tariffs are having devastating international effects.
In Lesotho, a country in south Africa of more than 2.3 million people, Trump’s threat of 50% tariffs and the 15% tariffs ultimately levied by the Trump administration decimated the nation’s garment industry, which had long been buoyed by a free trade agreement with the U.S. Trump called the country a nation “nobody has heard of,” and Lesotho’s Deputy Prime Minister Nthomeng Majara declared a state of economic emergency, citing massive unemployment and job loss.
Closer to home, shoppers are feeling the strain of rising inflation as companies begin to do what economists warned they would: pass tariff expenses down to U.S. consumers. The most recent Consumer Price Index found inflation up 2.7% year over year.
It’s against this backdrop that the U.S. Court of Appeals for the Federal Circuit in Washington D.C. heard arguments on July 31 from plaintiffs suing the Trump administration for an end to the tariffs, and from lawyers for the government arguing to keep them in place.
What’s at stake is whether Trump has managed to successfully wrest control of foreign trade policy powers from Congress and reposition that authority squarely at the feet of the executive.
Who’s suing the Trump administration?
Companies, states and private citizens launched lawsuits against the Trump administration after the president declared a trade deficit-based national emergency under IEEPA to launch his oppressive tariff regime.
At least five cases were filed in April and May, and two are being heard before the U.S. Court of Appeals for the Federal Circuit now.
One is an April 14 case filed by V.O.S. Selections, a small, New York-based wine and spirits importer, and four other import companies to the U.S. Court of International Trade. Plaintiffs argued the administration exceeded his authority under IEEPA, and that Congress is the entity that sets tariff rates. The second case filed in the U.S. Court of International Trade was brought by the attorneys general of 12 states: Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont. Notably, while Trump won Arizona and Nevada in the 2024 presidential election, the AGs in both states are elected Democrats.
The International Trade Court consolidated the cases, ruled the president overstepped his authority by imposing blanket tariffs, and issued a permanent injunction against future tariffs. As expected, the administration appealed the decision, and the federal appeals court has stayed — or paused enforcement of — the injunction while it considers the appeal.
The Trump admin claims the trade deficit is a national emergency
In its fact sheet about Trump’s national emergency declaration and IEEPA trade powers, the White House made its case that tariffs would make the U.S. more competitive, protect the country’s “sovereignty” and strengthen national and economic security.
The deficits Trump hates so “have led to the hollowing out of our manufacturing base,” the fact sheet said. Further, it claims, COVID and an attack by Houthi forces, which impacted shipping in the Middle East, exposed the U.S. to supply chain disruption, while drugs being smuggled into the country pose additional dangers. Finally, the administration said the U.S. doesn’t have enough stockpiled military equipment.
The question before the court is whether the issues the White House lays out rise to the level of a national emergency and give the president unilateral authority to authorize and impose foreign trade policy at will.
The courts don’t seem to be buying it
Politico called it a “frosty reception.” ABC news said judges “voiced skepticism.” Those unflattering summaries describe the tone of questions and answers given by the panel of 11 federal appeals court judges during the July 31 hearing.
“One of the major concerns that I have is that IEEPA doesn’t even mention the word tariffs anywhere,” said Obama appointee Judge Jimmie Reyna.
Another, Clinton appointee Judge Timothy Dyk, noted the intended role of Congress in setting tariffs.
“It’s just hard for me to see that Congress intended to give the president in IEEPA the wholesale authority to throw out the tariff schedule that Congress has adopted after years of careful work,” Dyk said, “and revise every one of these tariff rates.”
Watching live, Inu Manak, a trade fellow at the Council on Foreign Relations told TPM she felt good hearing judges ask “very pointed, direct questions, trying to establish whether there are guardrails or limits to the president.”
Trump is stretching IEEPA emergency declarations in an unprecedented way, said economist Bergsten, who said he helped negotiate IEEPA during his time at the U.S. Treasury Department in 1977.
“To implement policies like this under IEEPA, you have to rely on the existence of a national emergency that’s a threat to national security,” Bergsten said, “and it’s very hard to argue that any of this trade stuff falls in that category.”
How has the IEEPA been used historically?
Trump tried during his first administration to use IEEPA to levy tariffs against Mexico when he declared a national emergency for illegal immigration in 2019. But before that, the statute had been used more for sanctions than as a foreign economic policy tool, Georgetown law professor Kathleen Claussen said during an episode of NPR’s Planet Money podcast.
After Congress passed the law, President Jimmy Carter first used it in 1979 in response to the Iran hostage crisis, according to a Library of Congress publication detailing the history of the act and how presidents have used it. Carter used his IEEPA powers to lock Iran out of the U.S. finance market and to freeze Iranian government assets here. In 1985, President Ronald Reagan used the act to punish South Africa for its violent racial apartheid regime, revoking and prohibiting loans, military-related technology exports, and nuclear-related exports to the nation’s government.
Presidents George Bush and Barack Obama declared a national emergency and blocked property and transactions in North Korea, in response to North Korea’s nuclear program.
“I think it’s pretty clear that president Trump has overstepped his powers as articulated in IEEPA,” said Jared Bernstein, a former chief economist and economic adviser during the Obama administration.
A Trump-stacked SCOTUS means ‘it’s a 50-50 bet’ what’ll happen
Experts expect the case is heading for the Supreme Court. The conservative court, which features three Trump-appointed justices, has issued a number of rulings exponentially expanding executive powers. But, Bergsten noted, SCOTUS hasn’t always gone with the administration.
“It’s a 50-50 bet,” said Bergsten. “Under an objective look at the law, [IEEPA] should not extend to this activity.”
If the court strikes down Trump’s tariffs, there are other, less flexible and more time consuming methods Trump could use to enact his isolationist economic agenda. But in the meantime, the U.S. government would have to pay foreign exporters back, and it seems like that process would be a mess, according to an article from the Peterson Institute of International Economics, where Bergsten serves as director emeritus.
Bernstein, currently a policy fellow at the Center for American Progress, says he has little faith in the nation’s highest court not to simply bend to Trump’s will.
“The Supreme Court majority has time and again just rolled over and allowed the president — and has allowed the executive branch — to go way beyond historical precedence,” he said. “So my hope is that the International Trade Court’s decision will be ratified, but my fear is that the Supreme Court will ultimately overturn it.”
