Litigation and Trump’s Tariffs – Restoring Better Trade Relations.

                           Stuart S. Malawer, JD, Ph.D.*

Under Trump, Biden, and now Trump again, U.S. trade policy has veered away from its traditional post-World War II approach—shifting from multilateralism to a focus primarily on national and unilateral concerns. At the center of this shift has been the unprecedented tariff increases enacted by President Trump and a sharp rise in tensions with China. The average U.S. tariff level in 2017 (at the start of Trump 1.0) was 1.1%; it is now 18.3%.

Geopolitical risk has become one of the most important factors in the formulation of U.S. trade policy and multinational corporate strategy. President Trump aggressively enacted tariffs based on national-security under Section 232 of the 1962 Trade Expansion Act and based upon his national emergency powers under the 1977 International Emergency Economic Powers Act (IEEPA). Most recently, President Trump increased tariffs on India to 50%.

President Trump has interpreted his trade and national emergency powers very broadly. Under Section 232 the president may “adjust imports of goods if it is determined that these imports threaten to impair national security.” IEEPA allows “the president to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has its source in whole or substantial part outside the United States.”

What is not generally understood is the very broad range of trade statutes that govern the imposition of new tariffs by the president. Often, the president relies upon more than one statute. Among the more important statutes are those relating to antidumping duties, countervailing duties, safeguard provisions (Section 201), retaliatory actions (Section 301), national security (Section 232), national emergencies (IEEPA), infringement of patents (Section 337), market disruption (Section 406), and agricultural imports (Section 22), among others.

Crucial to the debate over presidential authority is the fact that Congress holds the exclusive constitutional power to regulate international trade and authorizes tariffs (Article I, Section 8, Clause 3). The president has no independent authority over tariffs or trade. Congress delegates this authority to the president, who must act strictly within the bounds of that delegation. This has become a central issue in domestic litigation over a range of tariff actions taken by President Trump.

Unfortunately, Congress has failed to restrict President Trump’s excessive tariff measures. However, court cases have recently been filed in the U.S. Court of International Trade—a specialized federal court located in New York City—challenging several presidential actions. This court has ruled against the president. The case concerning reciprocal tariffs is currently on appeal to the U.S. Court of Appeals for the Federal Circuit. So far, that court has not been impressed by the Trump administration’s arguments. Additional trade-related cases have been filed in other federal district courts, including the U.S. District Court in Washington, D.C., which has also ruled against the administration.

In my view, this kind of domestic litigation may be a principal means of curbing excessive executive action.

Surprisingly, these lawsuits filed challenging President Trump’s tariffs have been initiated by small companies and supported by conservative Republican megadonors, conservative attorneys, and several states—not by multinational corporations or foreign entities. Most of these legal actions challenge the president’s reliance on national emergencies under IEEPA, asserting that the tariffs issued under this statute are invalid. They argue also that no national emergency exists.

In assessing these claims, appellate courts need to closely examine whether the national emergency rationale is legitimate, whether the statute in question actually permits tariffs as well as the actual existence of a national security threat. A broader constitutional question is whether some of these actions fall within the president’s expansive diplomatic and foreign affairs powers, where he does possess broad authority under Article II of the U.S. Constitution.

It is well known that the president has claimed sweeping executive authority on non-trade issues such as immigration and border control. Numerous courts have ruled against the administration. In fact, hundreds of cases have been filed on a wide range of issues, and the administration has lost many at the preliminary stages. Most notably, the administration’s reliance on the 1798 Alien Enemies Act to control immigration has been firmly rejected.

So, where does this leave firms and our trading partners in confronting the Trump administration’s historic use of tariffs—a shift that has reversed U.S. tariff policy back to the Depression-era 1930s—and its excessive reliance on economic threats, which has undermined the post-war international system the U.S. helped build?

There is always the option of litigating trade disputes within U.S. federal courts—even though the Supreme Court has recently used the shadow docket to uphold various presidential actions, at least temporarily. Foreign states and foreign corporations may very well have standing to challenge these actions in U.S. courts.

Countries should also continue to pursue litigation or arbitration through the WTO’s dispute resolution system, despite its weakening over the years due to U.S. resistance. China, the U.S., the EU, and the Russian Federation have previously litigated WTO cases with some notable success. A rules-based global trading system remains in everyone’s best interest.

As an international trade lawyer and professor with a focus on national security, I would personally like to see both China and the U.S. rely more on U.S. domestic legal procedures and WTO mechanisms to manage their trade relations.

The use of national security as a legal justification for trade actions has already been addressed by both federal courts in the U.S. and the WTO. Yes, this kind of domestic and international litigation poses challenges. But it may well offer a viable path forward. There is no downside in trying.

In conclusion, tariffs are no longer an obscure issue. Nor are they solely economic. Tariffs have become geopolitical tools. For President Trump, they are instruments to impose his will on other nations—whatever the reason or motivation. What is needed now is a willingness among government and private leaders to pursue a legal strategy.

My belief is that rational actors exist in many countries. Actors who understand that their national interest includes a more effective and fair trading system. It is up to these leaders to work toward better trade relations within a legal framework that promotes the welfare of nations and their people.

From my experience—over fifty years of teaching international trade, national security, and international law—and working with students, foreign scholars, and policymakers around the world, I know that goodwill, combined with a sound legal strategy, can lead to a workable solution.

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*Dr. Stuart S. Malawer, JD, Ph.D., is Distinguished Service Professor of Law and International Trade Emeritus at George Mason University (Schar School of Policy and Government). He is the author of books on international business, international trade, international law, and national security. He is a member of the Bars of the Commonwealth of Virginia and the U.S. Court of International Trade.