Jason Rotenberg

Analysis of yesterday's Court of International Trade (CIT) decision enjoining Trump's IEEPA tariffs, and thoughts about what might come next: 1. The CIT found that all of Trump's IEEPA tariffs--the Canada, Mexico, and China tariffs, and the "Liberation Day" tariffs--are unlawful. The ruling does not apply to the "product" tariffs (steel, aluminum, autos, and the ones in train, such as semiconductors), which are done under Section 232 of the Trade Expansion Act of 1962, a separate statute. 2. The Government has 10 days to comply with the ruling, and has already appealed to the Court of Appeals for the Federal Circuit. The Appeals Court may stay the CIT decision pending an appeal, but I expect an appeal to move quickly--weeks, not months. 3. If the decision is upheld, importers should eventually be able to get a refund of tariffs paid to date. But the government will probably seek to avoid paying refunds until appeals are exhausted. 4. The CIT's opinion was elegantly reasoned and complex. It held that the "Liberation Day" tariffs are unlawful because if Trump wants to use tariffs to address the trade deficit--the stated basis for the Liberation Day tariffs--he has to use other provisions of law, including Section 122, which authorizes tariffs to deal with balance of payments issues, but which limits tariffs to 15% and 150 days. IEEPA may allow tariffs, but not tariffs to address the trade deficit. 5. With respect to the "fentanyl" tariffs, the CIT found that tariffs on broad categories of imports were not sufficiently tailored to "deal with" the declared threat--drug trafficking. Essentially, the CIT held that IEEPA's "dealing with" language requires that a measure directly deal with the threat, not just create leverage for negotiations. This reasoning, if endorsed by higher courts, could have implications for sanctions, which also rely on IEEPA. 6. What will Trump do, beyond appeal? A couple of options: 6a. (Legally strongest option): Use Section 301 to set a foundation for tariffs on major trading partners based on their unfair trade and economic practices. 301 could create a solid legal foundation for substantial tariffs on many trading partners, but which would require a much more disciplined tariff process and *might* create some upper bounds on rates. Trump much try to use Section 122 to maintain 10-15% tariffs for a few months while USTR works on 301 investigations. 6b. Dust off Section 338, a 1930-era provision that is sort of like 301, but which has fewer procedural requirements, and hasn't been used since the 1940s. If I were a government lawyer, I'd be worried about using 338 broadly given I just lost an IEEPA tariff case. But the Trump Administration has a higher litigation risk tolerance than I do. 6c. Rely even more on Section 232 to cover a *lot* of different products. Trump is already closing in on directing 50% of all 232 investigations (since 1962), but could go quite a bit further.