U.S. LAW & GLOBAL TRADE RELATIONS.

     What’s really interesting in tariff litigation against Trump’s tariffs? Six very interesting facts.

       One, there is an expanding legal campaign against these tariffs. Two, litigation has been filed by small firms (not large firms or multinational corporations) and various states — in both federal district courts and the Court of International Trade. Three, most interesting, it’s conservative non-profits funded by Koch and others that have funded many of these cases. Four, states (Oregon and California) have also brought litigation. Five, also to be noted is that attorney-generals of numerous states have signed off on amicus briefs. Six, needless to say, the administration is claiming reliance on tariffs is a necessary part of carrying out trade negotiations and foreign policy generally.

     Need to keep in mind that various presidents got the U.S. involved in wars (Korea, Vietnam, Iraq and Afghanistan) without a declaration of war — contrary to the fact that it’s Congress that has the exclusive right to declare war. Indeed, the Trump administration is already claiming in court that the president ha broad tariff power as part of his extensive foreign affairs and diplomatic powers under the Constitution.

      We’ll see how all this plays out in the federal district courts and the Court of International trade and then the Supreme Court.

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“The New Civil Liberties Alliance (NCLA), a nonprofit asked Ley to join a lawsuit challenging the constitutionality of the tariffs. Now in the vanguard of a rapidly expanding legal campaign arguing that the president overstepped his authority and usurped the role of Congress in applying levies to almost all imports entering the United States …. The NCLA describes itself as a nonpartisan organization that addresses violations of Americans’ civil liberties, but it has previously received financial support from conservative donor Charles Koch’s foundation — highlighting how backlash to Trump’s tariffs does not neatly follow traditional political lines …. Many large companies and top business executives have remained silent, in part for fear of drawing Trump’s ire, and no Fortune 500 company has pursued legal action …. Another nonprofit, Liberty Justice Center, has filed a suit in the U.S. Court of International Trade on behalf of a group of small businesses …. The states of Oregon and California have also sued. The complaints argue that no other president has used the International Emergency Economic Powers Act to implement tariffs, and that Trump cannot bypass Congress’s authority to draft tariff laws simply by invoking an emergency …. Tariffs now stand at 30 percent on imports from China after the Trump administration announced a deal Monday to lower tariffs for 90 days.” “Small-Business Owner and Tariff Litigation (Florida Federal Court.” Washington Post (May 20, 2025).

“A ruling that narrows IEEPA would have ripple effects across every domain in which economic instruments are used for strategic effect.” CIT Filing by Administratio (May 23, 2025).

“The starting point in thinking about the government’s power to impose tariffs is that under the US Constitution that power is given exclusively to the Congress, not the president. When the president announced his so-called “Liberation Day” tariffs on April 2 without going to Congress, he needed to have had in hand a pre-existing delegation of authority from the Congress for the tariffs to be legal. His announcement assigned tariff levels to nearly two hundred countries and territories. The grant of authority from Congress, if it occurred, must be very great indeed, nearly co-equal to that first given to Congress by the Constitution. The delegation to the president cannot have happened accidentally or simply be implied …. One would think that the issue is so clear-cut that the government would have no arguments to make, but it does have arguments and has made them. Here it is worth reflecting on the fact that what may appear to be inarguable on its face is often, in courts of law and in public discourse, very arguable. Take for example going to war. The Constitution assigns the sole authority to declare war to the Congress. But in the case of the Korean, Vietnam, and two Gulf Wars, all conflicts that were beyond all doubt “wars,” there was no Congressional declaration of war. Congressional approval was clear, it could be said, by Congress appropriating monies to support US participation in those conflicts. And besides, the president is commander-in-chief. Under the Constitution he has authority to conduct a war, not to declare it …. In a genuine balance of payments crisis in 1971, President Richard Nixon declared a national emergency. Using a World War I statute, the Trading with the Enemy Act (TWEA), in a way it had never been used before, he imposed a 10 percent import surcharge (a tariff) for four months to enable the US to abandon the gold standard and devalue the dollar, the latter with the agreement of America’s major trading partners. An importer of zippers, Yoshida International, challenged the president’s tariff. The CIT ruled that Nixon’s action was beyond what Congress had delegated. On appeal, the surcharge was upheld as an exercise of emergency authority properly delegated …. This did not sit well with the Congress. In 1974 it created a separate 150-day limited authority to deal with future balance of payments crises. In 1976, it enacted legislation to delete non-war situations from the 1917 TWEA and to terminate national emergencies by means of a vote of Congress. In 1977 it enacted the International Emergency Economic Powers Act (IEEPA), in which it provided authority to regulate trade whenever the president finds that an international economic emergency exists. Prior to the second Trump administration, presidents had declared 70 national emergencies but never used IEEPA to impose tariffs. Trump’s lawyers assert that this statute is a sufficiently broad delegation of the power over commerce that it authorizes his imposition of tariffs and his declaration of a national emergency …. The Senate sought to end this emergency, but its effort failed by a vote of 47–52. The Chinese president sought to remove all the tariffs by retaliating against American trade. The financial markets swooned when faced with the high levels of tariffs on both the Chinese and American sides. The resulting pressures appear to have caused President Trump to reduce substantially the tariffs on US imports from China. But the tariffs are suspended, not canceled …. The question of whether Trump’s broad tariffs will remain is therefore in the hands of the US courts …. How strong a bulwark against trade protectionism imposed at the sole discretion of the president will the courts prove to be?” “Trump’s Tariffs in Court.” Petersen Institute for International Economics (May 26, 2025).

      The De Minimis Exception (that provide no tariffs on imports less than $800 sent directly to individuals) has been terminated by the Trump administration for goods imported from China and Hong Kong.  (This revocation has been somewhat lessened as part of the subsequent U.S.-China truce and would be revoked by the new House budget bill.)  Such imports from China will now be subject to either 30% of their value or a flat fee of $25 that will increase to $50 on June 1st. Trump’s rationale, in part, is to better control Fentanyl imports. This development is another unfortunate trade and tariff step in Trump’s tariff war with China and broad challenge to the global trading system. This new rule applies also to trans-shipped Chinese products through third countries and a promise to extend this termination to other countries directly. Trump’s minimum 145% tariff on Chinese imports, of course, is a much larger problem.

     The De Minimis Exception was enacted by the Hoover administration in the 1930’s as part of the Tariff Act of 1930. Also known as the disastrous Smoot-Hawley legislation that spurred on the Great Depression and global protectionism. However, this exception, very interestingly, was intended to give the Secretary of the Treasury, in fact, some authority to reduce the harshness of the newer, higher U.S. tariffs. Needless to say, this new Trump action is contrary to that intention to reduce trade flows and is a serious blow to trade.

     This newer action by Trump will restrict consumer and small business commerce, increase inflation, harm U.S. consumers (especially low-income ones) and small businesses.  It has already hurt supply chains in the United States, global container shipping and ports in the United States. Significant impact on the U.S. economy is already being felt. Companies, merchants and consumers are already reacting. The next round of economic and trade data, which always lags real-time actual practice, will clearly disclose this. Very, very unfortunate protectionism.

     Unfortunately, some Republicans increasingly support generally these restrictive trade actions — away from free trade and their traditional positions. But courts (over 100 trade cases have been filed against the administration) and even the Senate have now indicated a growing negative reaction to the Trump tariff policies. Both have begun to question the Trump administration’s use of obscure laws, both trade and others (including the Congressional Review Act to overturn administrative regulation by simple majority vote) and self-serving interpretations of delegated trade authority (such as national emergency findings under IEEPA and national security under Section 232[B] of the Trade Expansion Act).

     Both the courts and the congress hold an increasing promise of success in reigning in historically destructive local and international policies of the Trump administration.

     By the way, this new Trump attack on global trade patterns opens new opportunities for criminal activity and rejects many of the benefits and strategies of newer Internet e-commerce platforms (Shein, Temu, Amazon). This will do nothing to increase domestic U.S. production of cheap textiles. No new investment will occur in the textile industry in North Carolina, Virginia or Mississippi. That industry has been dead in the U.S. for many, many decades. The workers and plants have moved on, literally.

     Just an aside. My father was the CEO of an apparel manufacturer in New York City for decades, employing mostly immigrants, and it was a non- union shop. Cheapest wages possible. Nevertheless, factory jobs started leaving 1n the early 1970s to Mississippi and other southern state. Later that decade most of the jobs went to China under long-term supply contracts. My father’s jobs for hundreds of workers disappeared. Again, these jobs are not coming back.

     The future of the U.S. economy is in innovation, technology, services and global trade. We need thoughtful policy and not policy by grievance and threats. That leading to nothing to protectionism, isolationism and abrogation of the rules-based trading system championed by the United States throughout the post-Cold War era — that brought great prosperity to the United States and many countries.

      Of course, the rules-based system that the United States championed since World War Two has been destroyed by the Trump administration. It needs to reenergize that system and to recommit to the rules of trade enacted by Congress and those of the global trading system. 

“The Trump administration officially eliminated a loophole that had allowed American shoppers to buy cheap goods from China without paying tariffs …. The loophole, called the de minimis rule, allowed products up to $800 to avoid tariffs and other red tape as long as they were shipped directly to U.S. consumers or small businesses …. U.S. Customs and Border Protection processed a billion such packages in 2023, the average value of which was $54 …. More than half of all de minimis shipments by value contained textile and apparel products … But opponents of ending the exemption complained that the move would significantly raise prices for American consumers, hurt small companies that had built their businesses around the loophole and slow the flow of trade between the countries …. The Trump administration has also promised to eliminate the loophole for shipments from other countries …. The de minimis exception was created in the 1930s …. Congress raised the threshold for de minimis packages to $5 in 1978 and $200 in 1993, and then to $800 in 2016 …. Current rules appear to create a discrepancy that allows goods moved through the Post Office to be subject to lower tariffs than goods moved using private carriers …. Goods that come into the United States from China via private carriers like DHL or FedEx will be subject to tariffs of at least 145 percent ….. The United States, for now, still offers the de minimis exception for countries other than China. Goods made in China are not supposed to qualify for de minimis, even if they are routed through another country.” “Chinese Tariff Loophole Closed (“De Minimis Exception”). New York Times (5.3.25).

      Numerous tariff lawsuits have now been filed against the Trump administration’s numerous tariffs actions. Most interesting, they have been filed by smaller firms, conservative groups and a broad range of other groups (including states and governors). Bigger firms have not done so yet. Nor has the U.S. Chamber of Commerce. Not sure why.

       These suits now seem to be the best bet in having the Trump tariffs declared unconstitutional. Trump administration recently argued (in the Court of International Trade) that courts cannot review the legality of presidential tariffs. However, a federal district court just denied Trump’s use of emergency presidential foreign affairs power under the 1798 Aliens Enemy Act, as to deportations.  Reigning in his excessive and related executive actions concerning foreign affairs (relying on old legislation) — which is much broader than his delegated tariff authority.

     My guess, the tariff litigation will succeed. It should be noted that the Senate recently failed by a tied vote (two anti-tariff senators were absent) in repealing various Trump tariffs. This was just a start of congressional action to repeal Trump’s tariffs. Of course, the Congress may yet still be able to reclaim its exclusive authority over trade (that it has delegated away since the 1930’s). My guess is, sooner than later.

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“There is a growing roster of opponents now legally challenging Trump’s ability to issue some of the tariffs in the first place.  Trump is facing a barrage of lawsuits from state officials, small businesses and even once-allied political groups, all contending that the president cannot sidestep Congress and tax virtually any import …. None of the lawsuits filed this month are supported by major business lobbying groups, even though many organizations — including the U.S. Chamber of Commerce and the Business Roundtable — have been sharply critical of the president’s tariff…. Instead, the battle has been left to a scattered yet growing roster of litigants …. Last week, a dozen Democratic attorneys general from states including Colorado, New York and Oregon also asked a federal judge to block many of Trump’s tariffs …. At the heart of the legal wrangling is a 1970s law, the International Emergency Economic Powers Act, which enables the president to order trade embargoes, set sanctions and limit foreign investment …. Trump invoked that law to impose his initial duties on Chinese exports, in what he described as an effort to stop the flow of fentanyl into the United States. He also used those powers to establish a 10 percent tax on exports from nearly every other country and to justify what he calls “reciprocal” tariffs. For evidence of an emergency, Trump primarily pointed to the trade deficit — the difference between what the United States exports to other nations and what it imports …. The latest lawsuit arrived Thursday from the Pacific Legal Foundation, a group with reported ties to the conservative donor Charles Koch. On behalf of a clothing company, a board game designer and other small businesses, the group faulted Trump for imposing an “unlawful and unconstitutional” 145 percent tariff on Chinese goods …. Another legal group with ties to Mr. Koch and the conservative financier Leonard A. Leo sued early this month on behalf of a Florida company facing high costs from the president’s tariffs on China. Leo is a co-chairman of the Federalist Society, which has advised Mr. Trump on judicial appointments. The organization behind the lawsuit, the New Civil Liberties Alliance, does not disclose its full range of donors …. In a separate lawsuit, two members of one of the largest tribes in the United States claimed that Mr. Trump’s tariffs on Canada violated treaty rights …. Without the economic emergency law, the president could have been forced to use much slower and narrower paths to tariffs, as he did with sector-specific levies including those on the auto industry …. In enacting the economic emergency law in 1977, Congress sought to curtail presidential powers after past commanders in chief had overused emergency declarations. Nixon had even tapped a precursor trade statute to impose his own 10 percent duty on imports, which similarly drew a court challenge, though the president prevailed …. The Liberty Justice Center, a nonprofit with past ties to Richard Uihlein, an Illinois industrialist and a Republican megadonor this month, the group sued the Trump administration on behalf of small businesses that say the recent tariffs have harmed them. That included Victor Schwartz, the founder of VOS Selections, a New York City company that imports specialty wine, spirits and sake.” “Businesses and States Sues Trump Tariffs Over Use of Emergency Power.” New York Times (April 28, 2025).

“U.S. President Donald Trump is accused of having started a global trade war. That’s wrong. The U.S. Congress is responsible for it, and only the U.S. Congress can stop it. If the core institution of American democracy cannot reassert its clear constitutional authority over U.S. trade policy, then the chaos of the past two months will continue for the next four years …. But trade also represents the best opportunity for Congress to find its voice …. But on trade, the divisions are less clear …. The erosion of Congress’s sovereignty over trade has been decades in the making …. The abdication of power by Congress has three chapters. Each one did a little more to erode congressional authority for what seemed perfectly sound reasons at the time. But in total, they have left Congress neutered as Trump creates growing chaos in the global trading system …. Until April 2 of this year, Congress’s passage of the Smoot-Hawley Tariff Act in 1930 was the most infamous day in U.S. trade history …. As the Depression ground on, Congress began to look for a way out of the mess it had made. The result was the Reciprocal Tariff Act of 1934—no, Trump did not invent the concept of “reciprocity”—which for the first time handed significant congressional tariff authority to the president. The bill authorized presidents to cut U.S. tariffs as long as other countries agreed to do the same …. The 1934 act launched the era of modern free trade negotiations …. The 1934 Reciprocal Tariff Act was the first great abdication of congressional trade authority, but the goal was to expand trade, not restrict it …. starting in the late 1960s and 1970s, however, as U.S. imports from Japan and Germany began to rise and the trade deficit widened, Congress gave the president brand-new powers to fight back with tariffs. Section 301, a provision of the Trade Act of 1974, as well as subsequent trade bills, gave the Office of the U.S. Trade Representative (USTR) authority to threaten tariffs against countries with “unjustifiable” and “unreasonable” trade practices deemed harmful to U.S. economic interests …. The biggest loophole exploited by Trump in his frenzy of new tariffs is the variety of emergency powers granted to the president by Congress over many decades. Some were intended to be used for tariffs, but in much narrower ways than the administration has acted; others stretch existing emergency powers beyond recognition and may be struck down by the courts. The Trump administration has used two core statutes—Section 232 of the 1962 Trade Expansion Act and the 1977 International Emergency Economic Powers Act (IEEPA)—in unprecedented ways …. Barring a temporary injunction, the court cases will likely take many months or more to resolve, leaving the Trump administration unfettered in its use of tariffs. That leaves Congress as the only branch of the U.S. government with the ability to stop Trump before massive damage is done to the U.S. and global economies.” “Trump’s Tariff War and Congress.” Foreign Policy (April 2025).

“National security is clearly not a genuine concern here. There is no “emergency” or “predatory incursion” by a foreign government at the border; protesting or writing op-eds does not turn students into terrorists …. The administration hopes that its actions will not be subject to judicial review because they supposedly involve the president’s core constitutional powers. Judges have begun to reject the executive’s claims ….  History has not looked kindly on the Supreme Court’s upholding of the internment of Japanese Americans as a constitutional exercise of executive national security power, even during wartime.” “Fake Emergencies.”  Washington Post (April 29, 2025).

” A bid to reject President Trump’s worldwide “Liberation Day” tariffs fell short in the Senate as most Republicans stayed aligned with the White House.  The measure championed by Republican Sen. Rand Paul (R., Ky.) failed to win a majority, with 49 in favor and 49 against, hurt by the absences of two tariff opponents—Sen. Sheldon Whitehouse (D., R.I.), who was returning from an event in South Korea, and Sen. Mitch McConnell (R., Ky.) …. The resolution sought to repeal America’s broad 10% tariffs on almost every nation and the higher tariffs on China and other “bad actors” by terminating the emergency declaration Trump used to impose the levies. The administration has argued that persistent trade deficits constitute an emergency under the International Emergency Economic Powers Act.” “Senate and Trump’s Tariffs.” Wall Street Journal (May 1, 2025).

The Trump administration argued in the Court of International Trade that it has no jurisdiction to review the legality of presidential tariffs. “Trump Tells CIT Can’t Review Tariffs.” Bloomberg (May 1, 2025).

“A federal judge permanently barred the Trump administration from invoking the Alien Enemies Act, an 18th-century wartime law, to deport Venezuelans it has deemed to be criminals saying that the White House’s use of the statute was illegal …. The court found that the “plain ordinary meaning” of the act’s language, like “invasion” and “predatory incursion,” referred to an attack by “military forces” and did not line up with Trump’s claims about the activities of Tren de Aragua …. While the A.C.L.U. has largely been successful in stopping the Trump administration from continuing to deport people under the act.” “Federal Court Rejects Presidential Use of  Wartime Legislation (1798 Alien Enemies Act) – No Invasion.” New York Times (May 2, 2025).