12 States Contest US Defense of IEEPA Tariffs at High Court

The states join two groups of importers in replying to the government's arguments in defense of the tariffs (see 2510200050).

The brief opened with the states' textual arguments against IEEPA, which lets the president "regulate ... importation or exportation" of property in which a foreign party has an interest. Like the importers, the 12 states said this power doesn't cover the power to impose tariffs. The states emphasized that this power should be read in context of all the other tariff laws on the books, which explicitly mention the word "tariff" or "duty."

The government "all but ignore[s] that context" and instead centers on dictionary definitions of the term "regulate" in other settings, the states noted. While dictionaries can be useful in identifying what words can mean, "Congress’s striking consistency when delegating tariffing authority provides much more direct evidence of statutory meaning" in the present context, the brief said. The U.S. can't point to a single other statute that delegates the power to tax through the term "regulate," the brief said.

The requirement that Congress use the word "tariff" or "duty" isn't a "magic word" requirement, as the U.S. said, but rather "reflects a reasonable expectation that Congress will use similar words to convey similar authority across different statutes," the brief said. The closest statute the government can find is Section 232, which lets the president "adjust" imports. In response, the 12 states said Section 232, in a parallel subsection, does actually use the word "duty," and, in addition, there's extensive legislative history behind Section 232 making clear that Congress is granting the president tariff authority.

Like the importers, the U.S. states also responded to the government's argument that if IEEPA includes the power to block all imports from entering the U.S., which no party disputes, then it surely includes the lesser power of taxation. The states said in response that the "power to ban activity does not always imply the power to restrict it in 'less extreme, more flexible' ways." The power to tax is "fundamentally different from the power to regulate or even ban" something, and the "delegation of the latter authority is not carte blanche to raise taxes," the brief said.

The states also attacked the government's reliance on Yoshida International v. U.S. -- a decision from the predecessor to the U.S. Court of Appeals for the Federal Circuit that upheld President Richard Nixon's 10% duty surcharge under the Trading With the Enemy Act, IEEPA's predecessor that used the same "regulate ... importation" language. The government argued that Congress passed IEEPA after Yoshida was decided, indicating that it knew this language included the power to impose tariffs and delegated it anyway.

In response, the states said "Congress did not intend to approve any prior use of TWEA when it enacted IEEPA," citing a House report that said it wasn't endorsing any particular uses of TWEA. “Nor does its choice to use the same wording as Section 5(b) mean that it agreed with Yoshida’s interpretation of that wording," the brief said. Congress was concerned about Nixon's use of TWEA, leading it to pass Section 122, which is a tariff authority that lets the president address the problem Nixon sought to address, a balance of payments issue, with his duty surcharge.

The states argued that "Yoshida cannot bear the weight defendants place on it." The brief added that it's "one thing to argue that Congress intended terms in IEEPA and TWEA to carry the same meaning" and "quite another to argue that Congress intended to codify a particular lower-court interpretation of TWEA -- much less an interpretation that came from just a single case that had divided the lower courts."

The primary difference between the states' arguments and the importers' arguments concerned the other restrictions found in IEEPA. The states argued that the reciprocal tariffs are unlawful, since prolonged trade deficits aren't an "unusual and extraordinary threat," and that the fentanyl tariffs are unlawful since they don't properly "deal with" the declared emergency of fentanyl trafficking. In addition, the states said the reciprocal tariffs are invalid, since they exceed the limits found in Section 122, arguing that Section 122 stripped IEEPA of its tariff authority, as acknowledged by the Yoshida court, and Section 122 applies equally to emergencies.

Regarding whether the fentanyl tariffs "deal with" the identified threats, the U.S. said that not only is this element unreviewable by the judiciary, but that the tariffs properly deal with fentanyl trafficking by creating leverage over foreign governments so as to induce them to crack down on the issue. The states said this is not a proper use of the statute.

The brief said that taking away a teenager's car keys "deals with" their "failure to do chores because it prevents them from doing something else with the time that could be spent on chores." While this also creates leverage, "the sanction deals with the issue by directly influencing the behavior of the target." Tariffs, on the other hand, are imposed on U.S. companies and consumers and "are more like taking away the older sibling’s car keys because a younger sibling failed to do their chores."

This doesn't "deal with the problem of undone chores," rather, it "just tries to get someone else -- the older sibling -- to deal with it," the brief said.