On Friday August 29 the US Court of Appeals for the Federal Circuit affirmed a ruling from the US Court of International Trade (CIT) which declared tariffs imposed using IEEPA (reciprocal and fentanyl tariffs) exceed the Presidents authority (stayed pending appeal).
The Federal Circuit’s order is stayed until October 14 anticipating appeal to the Supreme Court, here’s what you need to know.
TLDR
Nothing has changed for the moment. If Supreme Court accepts the case they will likely issue a further stay until they decide the case next summer.
Even if the Supreme Court strikes down the current tariffs, the President has several other legal authorities he can use to impose tariffs.
WHAT IS AT ISSUE?
Does ‘regulate’ mean ‘tariff’?
IEEPA grants the President authority to regulate transactions in an emergency. No explicit mention of “tariff”. Tariffs are widely recognized by the law as a tax. Does the phrase “regulate” encompass tariffs/taxes?
Can Congress grant tariff power to the President?
The power to levy tariffs is delegated to Congress in Article 1, Section 8. It is unconstitutional for the Executive, Congress, or the Courts to delegate their constitutionally assigned duties to another branch. So if IEEPA does grant the President the authority to levy tariffs, is it an unconstitutional assignment of authority?
Does this conform to the “major question doctrine”?
There is a legal doctrine called the “major questions doctrine”. The idea is major questions must be explicitly stated in laws passed by Congress. So even if one thinks IEEPA grants the President tariff authority, is that grant explicit enough to pass the major doctrines test?
WHAT HAPPENS IF THE RULING IS ULTIMATELY AFFIRMED?
If the Supreme Court declines to hear the case, or they hear the case and affirm the Federal Circuit, the case is remanded to the CIT to determine appropriate remedies. The CIT could:
- End the tariffs, permanent injunctive relief.
- Order refunds of all tariffs paid to date, including interest. Such relief could be narrow to just the parties in the lawsuit, or to any party that paid a tariff.
UNINTENDED CONSEQUENCES
If it is ultimately decided that the President has the authority to impose tariffs/taxes in “an emergency”, what taxes might this or some other President impose in the future? Note, a Presidential finding like “an emergency” is generally unreviewable by the courts.
IS THE FEDERAL CIRCUIT BIASED?
The Federal Circuit has 12 judges, but curiously one is 98 and refuses to resign, so effectively 11. They heard this case en banc, meaning all 11 judges. The vote was 7-4. Of the seven voting to affirm, one was Republican appointed. Of the 4 voting to reverse one was Democrat appointed.
WHAT’S NEXT?
The Supreme Court needs to decide if they will accept the case. Look for this decision in late September to mid-October time frame.
FURTHER READING
I’m no lawyer, here are some relevant links:
TARIFF LOOKUP FOR SEMICONDUCTORS
If you need to find the country of origin, HTS code, and tariff rate for semiconductors please try our no-cost Tariff Lookup Tool.