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Trump back in court Thursday to defend the tariffs he plans to impose Friday
An imposing threat to President Trump’s “Liberation Day” tariffs will be tested by a panel of Washington, D.C., federal appeals court judges on Thursday, less than 24 hours before those duties are scheduled to take effect for countries around the world.
In a case that is moving quickly through the judicial system, a group of small business importers and 12 states will clash with the US Justice Department over the president’s authority to impose the tariffs without authorization from Congress.
The Circuit Court of Appeals for the Federal Circuit, which is hearing the case, is reviewing a lower court’s prior decision in May to strike down the president’s tariffs. That ruling was put on hold pending a decision from a panel of appeals court judges, which is not expected before the additional tariffs take effect Friday.
The tariffs that go into effect tomorrow were originally unveiled on April 2, which Trump dubbed “Liberation Day,” and scheduled to start on April 9 but were then delayed 90 days and again to Aug. 1. Some of the rates have been adjusted after negotiations with major trading partners.
Read more: 5 ways to tariff-proof your finances
The courtroom showdown on Thursday will move businesses, investors, and consumers closer to answering a critical legal question that is materially affecting their bottom lines: Can the president unilaterally impose wide-ranging, global tariffs by invoking a law enacted in 1977 to protect the US from international threats?
That law, known as “IEEPA” — the International Economic Emergency Powers Act — authorizes the president to “regulate” international commerce after declaring a national emergency.
The appeals court judges are tasked with evaluating whether the president’s declared national emergencies — the flow of illegal fentanyl and illegal immigration into the US — are the type of emergencies that Congress intended when it created the law.
And if so, whether the “Liberation Day” tariffs are the type of regulation that Congress intended to address those emergencies.
Read more: The latest news and updates on Trump’s tariffs
Ilya Somin, the lawyer for the small business importers that successfully challenged Trump’s tariffs before the US Court of International Trade in May, argued in a blog post earlier this month that a Supreme Court decision issued in June titled FCC v. Consumers’ Research strengthens the challengers’ opposition to the tariffs.
The court held that Congress legally delegated authority to the Federal Communications Commission to impose fees on telecommunications companies.
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No matter how the appeals court rules, constitutional and trade law experts widely expect the case to eventually reach the US Supreme Court. If that happens, the matter could remain unsettled well into next year since the Supreme Court’s next term doesn’t start until October.
A separate challenge to Trump’s tariffs will also play out this fall. Two toy manufacturers are scheduled to make their own arguments against Trump’s duties before the D.C. Circuit Court of Appeals on Sept. 30 after winning their own lower court victory.
The Trump administration still has other options if it can’t win these courtroom battles on IEEPA. There are alternative laws that the administration could test out as taxing authority, all of which would be expected to draw litigation.
Somin, the lawyer for the small business importers challenging Trump’s tariffs, told Yahoo Finance last month that “if we win” the Trump administration “could try to use other statutes” to justify new tariffs.
“And that would be a lengthy, complex discussion about what [the president] can do,” added Somin, a law professor at George Mason University and constitutional studies chair at the Cato Institute.
One alternative statute that the president could try to cite as authority for tariffs is Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on a foreign nation so long as the US trade representative finds the nation has violated trade agreements or engaged in unfair trade practices.
Other statutes include Section 232 of the Trade Expansion Act of 1962, which empowers the president to impose tariffs on certain imports designated as a threat to the US economy, and Section 338 of the Tariff Act of 1930, which empowers the president to impose tariffs on countries that unreasonably restrict US goods.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
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