CAFC Pauses CIT Injunction on IEEPA Tariffs While It Mulls US Emergency Stay Motion

Judges Kimberly Moore, Alan Lourie, Timothy Dyk, Sharon Prost, Jimmie Reyna, Richard Taranto, Raymond Chen, Todd Hughes, Kara Stoll, Tiffany Cunningham and Leonard Stark granted the temporary reprieve to the U.S. and ordered the plaintiff-appellees -- a group of five importers and 12 U.S. states -- to file a reply to the stay motion by June 5. The government then has until June 9 to file its reply.

Both before CIT and CAFC, the U.S. said a stay wouldn't harm the plaintiffs, since "the government will issue refunds to plaintiffs, including any post-judgment interest that accrues," if the court leaves the tariffs in place while the appeal is pending.

On May 28, the trade court vacated Trump's executive orders setting reciprocal tariffs and tariffs on China, Canada and Mexico meant to curb the flow of fentanyl (see 2505280068). Judges Gary Katzmann, Timothy Reif and Jane Restani held that IEEPA doesn't provide the president with unlimited authority to impose tariffs, nor the authority to impose tariffs to address a trade imbalance, and that the fentanyl tariffs don't properly "deal with" the declared emergency, since creating leverage to address a problem isn't a power conferred by IEEPA.

The trade court gave the government 10 days to issue all necessary administrative orders to "effectuate" the court's permanent injunction against the tariffs. The U.S. immediately appealed the decision to the Federal Circuit and filed motions to stay in both the trade court and the appellate court. CIT ordered the plaintiffs to file a response by 12 p.m. EDT on May 30, while the Federal Circuit granted an administrative stay while the broader stay motion is briefed and argued.

In its motion for an emergency stay at the Federal Circuit, the U.S. said the trade court's decision is "rife with legal error" and "unilaterally disarms" the U.S. "in the face of the longstanding predatory trade practices of other countries." The government told the appellate court the trade court's decision "hamstrings" the U.S. and "threatens to unwind months of foreign-policy decision-making and sensitive diplomatic negotiations, at the expense of the Nation’s economic well-being and national security."

The U.S. particularly faulted CIT for failing to discuss declarations from four Trump Cabinet secretaries claiming how an injunction would threaten U.S. security or the "equitable requirements for issuing a permanent injunction." The government said the failure to discuss the injunction factors is a "textbook error that alone warrants vacating or staying the injunction."

The brief said the trade court issued a "sweeping, unprecedented, economy-threatening permanent injunction against the challenged tariffs without applying the traditional four-factor test for injunctive relief that requires considering the equities and public interest." Going through these factors, the U.S. then said the "equitable factors favor a stay." According to declarations from the commerce secretary, enjoining the tariffs would "undermine" the recently announced U.S.-U.K. trade deal, a recent "China trade agreement" and ongoing negotiations with other countries.

The government argued that the harms suffered in pulling the rug out from the president "are plainly irreparable," since the trade court's injunction "may have compromised delicate, time-sensitive foreign negotiations, perhaps irrevocably."

The stay motion also attacked the merits of the trade court's ruling, relying heavily on the holding in Yoshida International v. U.S., a 1975 decision that said a grant of authority to the president to "regulate ... importation" under the Trading With the Enemy Act, IEEPA's predecessor, allowed President Richard Nixon to impose a 10% duty to address a balance-of-payments crisis. The U.S. said Congress "removed any doubt" about whether the "regulate importation" language allows for tariffs by incorporating this language into IEEPA after Yoshida was decided, the brief said.

The government noted that the trade court "seemingly agreed that IEEPA authorizes the President to impose some tariffs, yet held that IEEPA does not authorize the President to impose these tariffs based on major-questions doctrine and nondelegation concerns." The brief said this is "manifestly wrong."

The trade court failed to identify a "plausible construction" of the statute "that would avoid its nondelegation concern," the brief added, arguing that CIT didn't provide any "consistent meaning" to the phrase "regulate ... importation." Instead, the trade court said imposing tariffs "sometimes qualifies" as regulating importation and sometimes doesn't, the brief said. If IEEPA provides for tariffs, "the court should have proceeded to deferentially assess whether these tariffs related to the declared emergencies," the government argued.

The U.S. also took issue with the government's claim that IEEPA can't be used to address trade deficits given the existence of Section 122, which lets the president impose limited tariffs to address balance-of-payments issues. The government said "IEEPA’s emergency powers are 'merely complementary'" to Section 122's powers, "which are both narrower (in being limited to tariffs that respond to only one type of concern) and broader (in not being limited to declared emergencies)."

And the government said CIT also got it wrong on the question of whether the tariffs on China, Canada and Mexico "deal with" the threat posed by fentanyl. Courts can't scrutinize whether the president's method of addressing risks is "justified from a policy perspective," the brief said. The trade court "erred in flyspecking the nexus between the contraband-drug-related tariffs and the emergencies the President declared," since creating leverage in negotiating a resolution of a declared emergency "is a central point of IEEPA," the brief said.