Trade Bar Reacts to Supreme Court Argument on IEEPA Tariffs
Various members of the trade bar speculated that the president's tariff authority under the International Emergency Economic Powers Act may face serious limits once the Supreme Court issues a decision in the lead cases on President Donald Trump's IEEPA tariffs. Following a Nov. 5 oral argument in which many of the justices appeared skeptical of Trump's sweeping use of the IEEPA to impose tariffs, many lawyers have said change may be coming in the world of trade.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Peter Harrell, a visiting scholar at Georgetown University Law Center and author of one of the amicus briefs in the case, said on LinkedIn that if he were in the Trump administration, he'd be "burning the midnight oil over the next couple of weeks drawing up tariff backup plans." Harrell said a "clear majority of the Justices appeared skeptical that IEEPA authorizes the type of broad-based tariffs that Trump has asserted this year."
The attorney also noted that even Justice Samuel Alito, who seemed most poised to defend the tariffs, even "appeared open to the proposition that IEEPA might authorize some TBD narrow tariffs in an event of a 'real' emergency," as opposed to Trump's across-the-board tariffs. During the argument, Alito suggested a tariff could be used should the U.S. face the "imminent threat of war" from a nation whose economy was heavily dependent on U.S. trade as a way to stave off that war (see 2511050001).
Alito and other justices also noted that IEEPA can be used to completely block imports, adding that this power should surely include the power to impose tariffs as a less-restrictive means of establishing leverage over another country. Harrell said even some of the justices that were "seemingly inclined towards that view did not appear to buy that IEEPA authorizes the type of effectively unbounded tariffing authority Trump has asserted."
Other attorneys were more wary of the likely result of the case due to how the argument proceeded. Customs attorney Lawrence Friedman told us he found the discussion of tariff authority as it relates to the power to impose embargoes "concerning." While Friedman said that he thinks there are clear differences between tariffs and embargoes, as a "textual analysis, this is worrisome."
Friedman added that the justices' discussion of licenses in particular gave him pause.
During the argument, the justices discussed whether Trump's tariffs could be recategorized as licenses, since IEEPA permits the president to "regulate ... importation" via "instructions, licenses, or otherwise." Friedman said this whole discussion "is a potential problem for the importers." The Supreme Court could use this language as an "off-ramp" to declare the tariffs the functional same as license fees and "find Congress expressly delegated that power."
However, Friedman said there was good counter discussion from Neal Katyal and Justice Sonya Sotomayor noting that licenses can't be revenue-raising and can only be used as a means to effect the validly delegated power. Friedman said he doesn't think the license argument will "carry the day," but he still found the discussion troubling.
Scott McBride, a former Commerce Department official and current partner at The Bristol Group, added that "licenses exist to 'permit' certain actions." He clarified that licensing fees exist only to recoup the government's costs in administering the licenses, which was a point made by Katyal, and that they aren't the equivalent "in any shape or form of taxes or tariffs." John Veccione, attorney at the New Civil Liberties Alliance, which has brought various cases against the IEEPA tariffs, told us he found the discussion of licenses to be "unnecessary as they function much differently from tariffs." Meanwhile, quotas can substitute for tariffs in effect but licenses don't, he said.
Friedman also found Justice Amy Coney Barrett's reference to the possibility of giving out refunds as being a "mess" to be a point of concern. However, the attorney found solace in Katyal's response, which said that just because something's difficult, doesn't mean it shouldn't be done.
Ashley Akers, senior counsel at Holland & Knight, told us that Barrett's question about remedies surprised her, adding that the type of detail in the question "is not something we’d typically expect to get deep into during a SCOTUS argument." She added that Barrett's text-based approach was a surprise, considering she centered on the exact language of the statute and focused on arguments not made by the government, including whether the statute's use of the word license could cover the president's tariffs.
Akers also said Chief Justice John Roberts' line of questions on the major questions doctrine was noteworthy, since it "could be a straightforward way to resolve the case."
Harrell said that he thinks the argument would have proceeded differently "if we were talking about much narrower, targeted tariffs." He noted that if the tariffs were just about the tariffs on India, which related to the nation's purchase of Russian oil -- a use of the statute highlighted by Justice Brett Kavanaugh -- then the court may be more inclined to give the president this tariff authority "for that type of geopolitical purpose," just as the law is used for sanctions.