US Tells CAFC Trade Court Can't Issue Universal Injunctions

The brief comes in reply to arguments made by a group of five importers and 12 U.S. states defending the trade court's decision to vacate the executive orders implementing the tariffs (see 2507080061). In their briefs, the importers and states argued that IEEPA categorically doesn't allow for tariffs; IEEPA can't be used to impose reciprocal tariffs due to Section 122, which lets the president impose limited tariffs to address a balance-of-payments issue; and that the tariffs on Canada, Mexico and China don't "deal with" the issue of fentanyl trafficking, since IEEPA can't be used to merely create leverage over another country.

Following CIT's injunction vacating the executive orders, which was stayed by the U.S. Court of Appeals for the Federal Circuit, the Supreme Court issued Trump v. CASA, which greatly limited the availability of universal injunctions. The court in CASA said relief must be tailored to the parties before the court unless universal relief is necessary to provide the parties complete relief. The importers and states said the decision doesn't impact the trade court's ruling in light of the Constitution's requirement that all tariffs be "uniform throughout the United States."

In response, the government said CASA means the trade court's injunction must be tailored to the parties before the case, adding that the importers and states "cite no authority" for the "remarkable proposition" that trade is exempt from CASA. "The uniformity requirement constrains Congress’s legislative powers," the brief said. In contrast, courts' equitable power comes from the Judiciary Act "and is limited to providing relief to the parties before the court."

The importers and states also said a universal injunction is needed to provide them with "complete relief." The U.S. said this claim "depends on a theory of harm the CIT did not endorse." While the importers and states said they will suffer a general injury due to the tariffs since vendors will raise prices and customers' business will be affected, leading them to buy less, the trade court "declined to decide whether such assertions were sufficient to establish standing," the brief said. Perhaps the court recognized that if this theory was embraced, "any business or individual affected by asserted price increases would have standing to challenge the tariffs," the government said.

In issuing a universal injunction and in light of CASA, the trade court "never considered" whether its decision "would be necessary to provide plaintiffs with complete relief," the government said.

The brief added that the equitable factors underlying the court's injunctive relief overwhelmingly favor the government, citing various declarations from Cabinet officials discussing the "devastating defect that an injunction would have on the Nation's position in ongoing trade negotiations." While the importers and states "selectively" quoted comments from those officials saying CIT's ruling had no effect on the talks, the U.S. said the plaintiffs ignored the fact that the injunction was stayed. Also, the plaintiffs can't "seriously dispute that a decision affirming the CIT’s injunction and terminating the stay would undermine those negotiations," the brief said.

In its decision, CIT said IEEPA can't be used to address trade deficits, since that power is contained in Section 122, noting that the specific outweighs the general when statutory powers butt heads. In response, the U.S. said the "specific-governs-the-general canon most often" applies to laws in which a "general permission or prohibition is contradicted by a specific prohibition or permission," which is "obviously not the case here." Section 122 fully applies to "balance-of-payments tariffs when the President has not declared an emergency and identified an 'unusual and extraordinary threat,'" while IEEPA provides "additional power" to address those same concerns "when those preconditions are met, and to address other concerns."

The government also extensively addressed the sole precedential decision on the issue, Yoshida International v. U.S., in which CAFC's predecessor upheld President Richard Nixon's 10% duty surcharge under the Trading With the Enemy Act, IEEPA's predecessor that uses identical language to what's in IEEPA. Yoshida didn't have to grapple with the interplay between IEEPA and Section 122, since Section 122 wasn't a law when Nixon imposed the surcharge. However, in a key footnote, the court said that surcharges imposed "in response to balance of payments problem" after Section 122's enactment must comply with that provision.

In response, the U.S. said "context is critical." The footnote came after a sentence stating that "emergencies are expected to be shortlived," the government said. The footnote then said, though Nixon's surcharge was in effect less than five months, the emergency underlying the surcharge "had not yet been terminated," adding that the failure to terminate the emergency was "rendered moot" by Section 122's enactment.

The government thus said the statement that further surcharges must comply with Section 122 "reflects the understanding that, given the passage of time, such surcharges would no longer be in the context of a true emergency." Otherwise, it wouldn't make sense for the court to have said that if the president were faced with an emergency he wouldn't need to "follow limiting procedures prescribed in other" provisions, such as Section 122, meant for "continuing use during normal times," the brief said. It "defies credulity to suggest that when Congress enacted IEEPA, using the same language that had been construed to authorize a balance-of-payments surcharge in TWEA, Congress meant to exclude such authority.”

In discussing the trade court's ruling that the tariffs on Canada, Mexico and China don't "deal with" the declared emergency of fentanyl trafficking, the U.S. noted that the U.S. states, which are the only plaintiffs challenging the trafficking tariffs, "all but abandon any defense of the CIT's conclusion that those tariffs" don't "deal with" the declared emergency." The states also don't explain how courts could "meaningfully review whether tariffs 'deal with' a declared emergency," which the U.S. said is an issue "immune from judicial scrutiny."

While the states said the creation of leverage as a way of dealing with the emergency would read the "deal with" language out of the IEEPA, the government said this is "difficult to understand." No one is claiming the "'deal with' the declared concern" IEEPA requirement isn't genuine, the U.S. said. Rather, the question is "simply whether actions under IEEPA can 'deal with' a concern only through 'a direct link between an act and the problem it purports to address,' as the CIT concluded," or whether they can "deal with" a concern by "creating leverage in negotiations over its resolution," the brief said.