Extraordinary case: can Trump defend duties in U.S. court

On June 11, US President Donald Trump said the court sided with him and ruled that the US can use duties "to protect itself from other countries." But Igor Slabykh, a lawyer and author of the USlegalnews telegram channel about US legal news, believes that it is too early for the US administration to celebrate victory. How are the US court battles around import duties developing and where can they lead?

That US President Donald Trump would use duties as one of his main policy tools was no secret. Trump described himself as a "man of duties" and declared that tariffs are "the most beautiful word in the dictionary." 

The U.S. president has promised that higher duties will help provide revenue for the budget, and at some point the duties could  "replace" the income tax that, with few exceptions, all individuals and businesses in the U.S. pay.

Much can be argued about how successful such a strategy is from an economic point of view, but at least one thing is clear: the US administration's plans have run afoul of the American judicial system;

Dissatisfied with the high duties and the confusion that accompanied the decisions to impose and freeze them, American companies went to court. The plaintiffs include a whole set of very different companies from all parts of the United States. They all have one thing in common: their businesses depend on supplies from abroad. For example, V.O.S. Selections, named after founder Victor Owen Schwartz, sells alcohol from all over the world. Plastic Services and Products makes plastic pipes and drains, MicroKits makes electronic kits for children and musical instruments, Terry Precision Cycling makes women's cycling apparel, and Learning Resources makes educational toys for children.

And the courts (at least so far in the first instance) have sided with business, recognizing the U.S. president's actions in regulating tariffs as illegal.

The Court of International Trade and the federal Court for the District of Columbia have now issued decisions. Despite the unusual name, the Court of International Trade is a regular U.S. federal court with jurisdiction over duty disputes. A different federal court heard the second suit because the plaintiffs placed greater emphasis on the president's violation of constitutional norms and federal laws. 

It should not be surprising, therefore, that essentially very similar claims were heard by two different courts.

The U.S. Constitution is quite straightforward in regulating taxes and a private type of tax - duties. All taxes are set by Congress. However, traditionally it can delegate some of its powers to the president;

Congress made its first such decision six months after the United States entered the First World War. In 1917, the Trading with the Enemy Act was passed, which gave the president the power to regulate foreign trade during the war. 

It was in effect until 1977, and then Congress passed the International Emergency Economic Powers Act. This statute gave the president the power to regulate imports and exports in case of emergencies. And it was the one that Trump used, indicating that an imbalance in international trade is the kind of extreme situation that requires an immediate presidential response. 

In general, now the position of the US administration is based on the fact that, first, the president can impose tariffs on the basis of the law and this is confirmed by precedents. And, secondly, the court has no right at all to check the actions of the head of state.

In the first case, the U.S. administration cited the 1975 case of United States v. Yoshida International, Inc. It was preceded by the fact that the United States faced a balance of payments deficit in 1971, and U.S. President Richard Nixon solved the problem by imposing a 10 percent duty on imports. This was part of the sweeping economic reforms that came to be known as the Nixon shock. The president said at the time that the duties were needed to help deal with the country's growing deficit and slow the influx of imports - in addition to the administration's decision to unlink the dollar from gold. 

Although these U.S. duties were rescinded four months later, the Japanese company decided to challenge them in court. The trial court ruled that President Nixon had the power to regulate exports and imports during emergencies, but that power did not include the ability to impose duties. 

The appeals court reversed the decision, saying the president had that authority. The case did not reach the Supreme Court, the decision of the appellate court was final. 

This is exactly what the Trump administration has been referring to as well. 

However, modern courts have indicated that it is wrong to use this precedent now: too many circumstances have changed since then, even a new law was passed that reduced the President's powers. The court pointed out that the factual circumstances of the cases are also different: Nixon imposed the duties as a limited temporary measure, while Trump, on the contrary, used them as a permanent element of trade policy;

Moreover, the Trade Act of 1974 explicitly states that deficits alone do not authorize the President to impose duties unrestrictedly.

The court also referred to what actually constitutes an emergency, as spelled out in the International Emergency Economic Powers Act. It says that the source of the emergency is wholly or predominantly outside the United States, the threat of the emergency must be unusual and extraordinary, and the president's actions must affect the threat.

But the court agreed with the plaintiffs that trade deficits are not unusual and extraordinary. That alone is enough to see a violation of the law in the president's actions. In addition, it's not that the government has helped the courts see the situation differently. In fact, it has refused to provide any explanation for its actions in terms of these requirements.

In return, the administration simply attempted to utilize the political question doctrine. This is a legal concept adopted by the U.S. Supreme Court. Its essence, simply put, is that there are issues that are inherently political, which means that they should be decided by Congress or the president, not the court;

However, the most important difficulty with this doctrine is to understand whether a particular decision is political. 

The U.S. administration argues in court that it's up to the president to determine that there is an "unusual and extraordinary" threat, and the courts can't sway that decision or test its correctness. 

Both courts disagreed: in their view, it is the standard approach to test the boundaries of the limits that the law imposes on the executive branch. They held that the President had exceeded his authority.

Expectedly, the two court decisions were quickly challenged by the White House in appeals. In the U.S., despite an appeal, a court decision automatically takes effect unless a trial or appellate court determines that it should be stayed. 

In a federal court in the District of Columbia, Judge Rudolph Contreras himself suspended the entry into force of his own decision. He felt that if an appellate court in another similar case had stayed the decision, he should as well.

In the Court of International Trade, it was more complicated;

Right on the day after the decision was challenged, the entire appellate court decided to administratively suspend the first instance decision. This is the case when judges as if to say: "We are not deciding anything yet, we just need time to think whether it is necessary to suspend the contested decision";

On June 10, the appeal decided that the decision of the trial court should be suspended, and the President's decrees, on the contrary, reinstated while the appeal is pending. Some see this as a sign that the judges are leaning in favor of the president, but I would not give it much weight.

First, the judges said nothing on the merits of the case. And second, a stay of the trial court's decision is a routine tribute to executive decisions and the result of an analysis of whether plaintiffs or defendants are likely to suffer irreparable harm from the commencement of the trial court's action pending appeal.

Nevertheless, the appellate judges recognized that the case was extremely important, so they scheduled an accelerated progression of the case: the hearing on the merits will take place as early as July 31. It may not seem to some that such a long deadline is indeed an abbreviated one. But here it should be noted that a normal review in this appellate court would have taken a year and a half.

President Trump's reaction to the appeals court ruling is interesting. 

On his Truth Social network, he wrote that an appeals court had allowed the president to enforce the duties and called the decision "a victory for the United States."

Nevertheless, given that the court did not address the merits of the decision, Trump's joy can be called premature. 

Major legal battles lie ahead, and they include not only the court of appeals, but also the U.S. Supreme Court. There is little doubt that the case will reach the highest court, and it will be the Supreme Court justices who will have to set the record straight;