Our New Federal Circuit Amicus Brief in the Section 122 Tariff Case

Soon after these new tariffs were announced, two small businesses and a coalition of 24 state governments filed lawsuits in the US Court of International Trade (CIT) challenging their legality. In May, the CIT ruled that these new tariffs are illegal. Now the case has been appealed to the US Court of Appeals for the Federal Circuit.

Cato and Professor Ilya Somin, our B. Kenneth Simon Chair in Constitutional Studies, have filed an amicus brief supporting the CIT’s decision; Somin previously served as co-counsel to the victorious plaintiffs in the IEEPA Supreme Court tariff case. We thank Daniel Wolff, Alexander Schaefer, and Joshua Claybourn of Crowell & Moring for assistance in drafting and filing the brief.

In our brief, we explain why this sweeping imposition of tariffs is just as illegal as the previous one was, and for many of the same reasons.

First, our brief explains why Section 122 simply cannot be used in the current circumstances. The statute only permits tariffs for up to 150 days in response to “fundamental international payments problems” that cause “large and serious United States balance-of-payments deficits” or “an imminent and significant depreciation of the dollar,” or that create a need to cooperate with other countries in addressing an “international balance-of-payments disequilibrium.” But these conditions are only possible under a fixed exchange rate system, such as the one the US formerly had under the gold standard. These conditions cannot and do not exist in a flexible exchange rate regime of the sort in place today.

Next, we explain why, if there is any ambiguity about whether Section 122 authorizes the massive tariffs imposed by the administration, the major questions doctrine requires this issue to be resolved against the government. The major questions doctrine requires Congress to “speak clearly” when it assigns to the executive “decisions of vast economic and political significance.” The impact of the new Section 122 tariffs is as large or larger than many previous policies invalidated by the Supreme Court on major questions doctrine grounds. And the tariff power is not exempt from major questions scrutiny on the supposed ground that it is a “foreign affairs” power. The major questions doctrine also counts against giving the administration a blank check in determining whether the preconditions to invoke Section 122 exist.

Finally, if the court were to conclude that Section 122 does somehow grant the president the sweeping power he claims, it must rule that the law is an unconstitutional delegation of legislative power to the executive. Congress cannot give the president what would essentially be unlimited power to impose up to 15% tariffs on imports from any nation, especially since the administration’s approach would allow the executive to circumvent the 150-day time limit simply by declaring that a new balance-of-payments crisis has arisen after it expires.

The Federal Circuit should affirm the decision of the Court of International Trade and declare the new round of tariffs to be illegal.

I wrote about the Court of International Trade decision against the Section 122 tariffs here, and previously wrote about why these tariffs are illegal here. Trump has also tried to use Section 301 of the Trade Act of 1974 to impose massive illegal tariffs against numerous trading partners. Litigation challenging them is also ongoing.

UPDATE: A bipartisan and cross-ideological group of prominent economists also filed a notable amicus brief in the Section 122 case today. See here.