Oregon's AG Confident a Judge Will Question Invocation of Trade Deficits as a National Emergency
The 12 states that recently launched a lawsuit against all tariff action taken by President Donald Trump under the International Emergency Economic Powers Act will begin working on a preliminary injunction motion against the tariffs "in the near future," Oregon Attorney General Dan Rayfield told us. Rayfield was confident in the prospect of being able to show that Oregon and its many public institutions will suffer "irreparable harm" without the injunction and that a judge will be willing to question the validity of Trump's declaration that bilateral trade deficits amount to an "unusual and extraordinary" threat.
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The 12 states, led by Oregon, filed their suit on April 23 at the Court of International Trade to challenge all of Trump's executive orders imposing tariffs using powers in the IEEPA -- the reciprocal tariffs and duties on China, Canada and Mexico to combat drug trafficking (see 2504230067). With Rayfield's expressed intent to file a motion for a preliminary injunction comes the inevitable question on whether the states will be able to show they will likely suffer irreparable harm without such relief.
This element has already proved to be a sticking point for some IEEPA plaintiffs. Recently, the trade court denied a temporary restraining order application from five companies challenging the tariffs on the grounds that the companies didn't clearly show a likelihood that they would suffer "immediate and irreparable harm" before the court could assess their PI motion (see 2504210050). None of the five companies had actually paid the tariffs.
Rayfield says his case tells a different story, noting at least one instance of a public institution in his state paying more for an import as a result of the tariffs. In November, the University of Oregon bought a "cryogenic single-photon counting detector system," initially purchased at $182,733. However, due to a 10% reciprocal tariff imposed on Switzerland, the source of the product, the customs broker required the university to pay an additional $18,579 prior to delivery.
"I think that there are things going on right now in each state that are analogous to those types of allegations that we'll be able to meet," Rayfield said. The state AG said his team has done a "little bit of fact finding on the front end to draft the complaint," but is now moving to that "second phase" to support the PI motion. An added difficulty in drafting the motion will be coordinating among the 12 states in proving that irreparable harm will be suffered without the injunction, Rayfield said.
He said the "best practice is that we work all together as 12 states," since each state has a different story to tell on how the tariffs are impacting them. Oregon has 80 agencies, along with "other governmental agencies, like Oregon Health Sciences University," which provides medical care, making it a "purchaser of power," Rayfield said. "Once you start digging in, it is a wealth of realities of a modern economy of how we purchase from international folks.”
The AG also addressed possible concerns about establishing standing -- an issue that is similarly plaguing other IEEPA litigants (see 2504210050). Rayfield said the state can counter a potential issue regarding the "traceability" of the harm suffered by the state by noting both informal and formal ties to higher costs and the tariffs. On the formal side, the University of Oregon has specific contract language stating that the tariffs are causing price increases, he said. On the informal side, the state can offer "conversations and emails" on price talks to show traceability.
Regarding the substance of the dispute, Rayfield said he is confident that the judiciary could wade into the question of whether the president permissibly declared trade deficits to be a national emergency. "I wouldn't have filed this lawsuit if I didn't think that the president had overstepped his authority under IEEPA," he said.
Rayfield cited Section 122 and the legislative history of IEEPA to support this position. Section 122 allows the president to impose a tariff up to 15% for 150 days to address balance of payments issues and was passed after President Richard Nixon used the Trading With the Enemy Act, IEEPA's predecessor, to impose a 10% duty surcharge.
The state AG said, "When you have Congress purposefully, thoughtfully voting on laws for a balance of payment" tariff and then passing IEEPA, "you have to look at the nexus between those two things, and I think that's incredibly powerful." He said the idea that trade deficits are an "unusual and extraordinary" circumstance "just doesn’t make sense to ordinary people, and it won’t make sense to a judge."
In response, the government may argue that Section 122 is wholly unequipped to meet the scope of the trade deficit issue, making IEEPA the proper tool to use. Rayfield said he ultimately doesn't think this claim "holds water." He added that Congress very clearly gave the president certain tariff powers, and the president doesn't get to "creatively law search to get around them" if he doesn't like them.
As part of the complaint, Oregon also contested the series of Cargo Systems Messaging Service guidance documents implementing the tariffs under the Administrative Procedure Act. An attorney close to the case defended the invocation of the APA and said they believe the APA "provides for review of agency action regardless of whether it's called for by statute or executive order." The attorney said the complaint included the APA claims so that the court could enjoin CBP from collecting the duties and to subject the agency's actions to the "arbitrary and capricious" standard of review.