Trump's tariffs poised for major test before federal appeals court

Washington — A federal appeals court is set to convene Thursday to consider President Trump's use of an emergency powers law to impose sweeping tariffs on nearly every U.S. trading partner.

The U.S. Court of Appeals for the Federal Circuit will hear arguments in the Trump administration's appeal of a ruling from a trade-focused lower court that found the president did not have the authority to hit foreign nations with 10% tariffs under the International Emergency Economic Powers Act, or IEEPA.

While a three-judge panel on the the U.S. Court of International Trade blocked the sweeping duties that the president assessed on most countries, the Federal Circuit temporarily reinstated the tariffs while it considers the dispute.

The legal fights before the appeals court were brought by a group of 12 states and five small businesses, and their cases are a major test of the centerpiece of Mr. Trump's economic agenda. The Federal Circuit's decision is likely to be appealed to the Supreme Court, though a ruling in favor of Mr. Trump from the conservative court is far from certain.

The president pointed to the hearing on his Truth Social platform Thursday morning, saying, "To all of my great lawyers who have fought so hard to save our Country, good luck in America's big case today. If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE "DEAD," WITH NO CHANCE OF SURVIVAL OR SUCCESS. Thank you for your attention to this matter!"

The president has relied on tariffs as a way to force trading partners to negotiate deals that he said are more favorable to the U.S. and reduce trade imbalances. Since Mr. Trump announced his sprawling tariff regime on April 2, which he dubbed "Liberation Day," the administration has said it reached trade deals with five Asian countries, the United Kingdom and the European Union. Many economists argue tariffs could lead to higher consumer prices and slower economic growth.

The tariffs announced in early April set a 10% baseline tariff on nearly every country, and reciprocal tariffs above the 10% rate on dozens of trading partners. While the reciprocal levies were initially supposed to take effect April 9, Mr. Trump issued a 90-day pause and lowered the rate for countries subject to the higher tariffs to 10%. Some of those higher reciprocal duties are set to go back into place Friday.

Mr. Trump has since said that he would increase the blanket tariff rate for nations that don't enter into trade deals with the U.S. to "somewhere in the 15% to 20% range."

Only the 10% baseline tariffs, and higher levies on Chinese, Canadian and Mexican imports that the president said were to combat the trafficking of fentanyl into the U.S., are at issue in the cases before the Federal Circuit.

No president before Mr. Trump had invoked IEEPA to impose tariffs, and the Constitution vests the power to assess levies in Congress. IEEPA does not include any references to tariffs or duties, and it has typically been used by presidents to impose economic sanctions on foreign nations.

Under IEEPA, the president can exercise the law's authority in instances involving "an unusual and extraordinary threat" to national security or the economy for which "a national emergency has been declared."

In rolling out his tariffs, Mr. Trump claimed that trade deficits and the flow of illicit drugs across U.S. borders constituted national emergencies and were threats to national security and the economy.

But the challengers to his tariffs argue that trade deficits have persisted for 50 years, and they warned that if allowed, the president would have limitless power to set tariffs of any amount against any product.

"By the government's telling, IEEPA empowers the president to impose whatever tariffs he chooses any time he finds (in his assertedly unreviewable discretion) that a trade deficit is creating significant national problems," lawyers for the small businesses wrote in a filing.

They also argued that a different law, a provision of the Trade Act of 1974, governs the president's imposition of tariffs in response to trade deficits, but caps the duties at 15% and limits their duration to five months.

In addition to claiming that IEEPA does not authorize Mr. Trump's tariffs, lawyers for the small businesses and states argue that they violate the major questions and nondelegation doctrines, legal principles that have in recent years been raised by the Supreme Court's conservative majority.

Under the major questions doctrine, an agency that seeks to decide an issue of major political or economic significance must have clear authorization from Congress. And under the nondelegation doctrine, Congress cannot delegate its legislative power to executive branch agencies unless it sets out an "intelligible" and judicially enforceable principle to guide an agency.

"Congress alone has constitutional authority to impose tariffs," lawyers for the states wrote in a filing. "But under President Trump's reading of IEEPA, Congress gave him the authority to rewrite the tariff schedules at his whim."

The Trump administration has defended the tariffs and said they were imposed because the president believes they are needed to address "grave threats" to U.S. national security and the economy.

"President Trump has found that America's exploding trade deficit, the implications of that deficit for our economy and national security, and a fentanyl importation crisis that has claimed thousands of American lives constitute national emergencies," Justice Department lawyers wrote in a filing.

They noted that Mr. Trump's plans for tariffs were a key component of his 2024 presidential campaign and said they've been successful at sparking negotiations on trade deals with U.S. partners.

"The CIT's injunction would, if affirmed, disrupt the Executive Branch's ongoing, sensitive diplomatic negotiations with virtually every major trading partner. And it would unilaterally deprive the United States of a powerful tool for combating systemic distortions in the global trading system, thus allowing other nations to continue to hold American exporters hostage to their unreasonable, discriminatory, and sometimes retaliatory trade policies," Justice Department lawyers argued.

It's unclear how quickly the Federal Circuit will rule.