On July 31, the Federal Circuit heard oral argument in V.O.S. Selections, Inc. v. Trump, an en banc case involving challenges to the legality of President Trump’s tariffs under the International Emergency Economic Powers Act. We have been monitoring this case both because it is being considered en banc and because it attracted numerous amicus briefs. This is our argument recap.
Brett Schumate argued for the federal government. He began by claiming that President Trump imposed his tariffs under IEEPA to “combat emergencies involving the flood of illegal drugs into the United States and the consequences of our exploding trade deficit.” A judge questioned his stance, commenting that “IEEPA has been rarely used” and that, in fact, “it’s been over 50 years or so since it’s been used.” In response, Schumate argued “[t]he government uses IEEPA all the time” even if it “has not been used for tariffs.” The same judge then asked Schumate when the first time IEEPA was used for tariffs. Schumate responded by conceding “[t]his is the first time IEEPA has been used for tariffs.”
Schumate went on to argue that “this court’s predecessor” court previously held that the IEEPA’s language authorized tariffs. Schumate maintained that “Congress was legislating against the backdrop” of that case “when it incorporated the same language” into IEEPA, and by “incorporating that exact same language,” he said, Congress was “authorizing the President to use IEEPA to impose tariffs.”
A judge then questioned whether it was the government’s contention that “the plain and ordinary meaning of ‘regulate’ includes the power to tax a tariff.” Schumate responded by arguing that “IEEPA says not just ‘regulate,’ but ‘regulate importation.'” The judge then brought up the legal concept of noscitur a sociis, pointing out that “‘tariff’ seems to have no friends” in IEEPA. Schumate responded by arguing that President Trump relied on section 1702(a)(1)(b) of IEEPA, and that “the authority the President invoked here is the power to regulate importation.”
A judge then asked how the government should “deal with the fact that” the court’s precedent “seemed to give a narrower construction to the statute” than the government was “giving to it now.” The judge pointed out that the construction that was given in the prior case was “not a broad construction that permits upending the entire tariff schedule.”
Another judge then noted that the IEEPA says “prevent or prohibit,” and that sometimes Congress wants to give delegates “a tough choice between really tough action and no action, because intermediate kinds of actions . . . are too easy.” Schumate responded by saying that IEEPA “is a broad emergency statute,” and that Congress “wanted to provide broad and flexible authority” to the President in the context of emergencies. As a result, Schumate argued, “you have to read the phrase ‘regulate importation’ in the context of an extraordinary delegation of power to the President.” When asked whether his interpretation was realistic, Schumate argued that, “[j]ust a few years ago, Congress terminated the COVID emergency,” and that IEEPA “provides for extensive procedures for Congress to be involved in this process.”
Another judge expressed the view that “one of the major concerns” with Schumate’s argument “is that IEEPA doesn’t even mention the word tariffs anywhere.” This judge, moreover, said that Congress was “certainly” aware of tariffs when it drafted IEEPA. In response, Schumate argued “there are at least two examples of statutes that authorize tariffs that don’t use the word tariffs.”
Another judge stated that “regulation” in the context of the court’s precedent means “the power to impose limited tariffs within this framework,” and asked if President Trump’s executive order complied “with that limited framework.” Schumate responded that it does, “because you have to find some law that the President violated to strike down the tariffs.” The judge commented that this does not have to be the case if the tariffs “exceeds the definition of ‘regulate’ as adopted by Congress.”
A judge then asked Schumate if he was asking for “unbounded authority” for President Trump to levy tariffs. Schumate argued that “there is no limit on the cap of the tariff in IEEPA itself.” The judge then asked if Schumate read the court’s precedent “as suggesting that there should be a limit on the amount,” commenting that, if Congress ratified that precedent, “I think it ratified all of it.” This judge indicated that Congress didn’t say “‘regulate’ means ‘tariffs'” in the legislative history.
Another judge then asked Schumate if he had read the relevant legislative history. The judge noted that “there are portions of that history that really do take issue with” the court’s precedent and “potentially don’t support it.” This judge ultimately asked Schumate what the “substantial limits” were on IEEPA. Schumate responded by saying section 1702(b) “identifies four specific limits on IEEPA authority.”
Another judge questioned the government’s position, asking how Schumate can read the court’s precedent as “authorizing that kind of wholesale rewriting of the tariff schedules.” Schumate responded by arguing that “the existence of limited authority under certain trade acts does not preclude the execution of other broader authority under a national emergency powers act.” The judge pointed out that the court’s predecessor said “the declaration of a national emergency is not a talisman enabling the President to rewrite the tariff schedules” because “that would sound the death knell of the Constitution.” The judge said that “it seems pretty clear to me that . . . the President doesn’t have the authority to rewrite the tariff schedules.”
Another judge asked if “there needed to be a limit in IEEPA that is lacking, because it’s standardless in terms of what kind of guidance Congress gave or should have given to the President in terms of figuring out how far it could go in terms of imposing these types of tariffs.” Schumate responded by saying that “a dissatisfaction with the limits in IEEPA itself is not a license for the court to impose its own limitations on the statute.”
A judge then asked Schumate why President Trump did not rely on the Trade Act of 1974 to enact his tariffs, since Section 122 is “more specific,” noting that “one of the rules of interpretation in the law is that the specific governs the general.” Schumate responded by saying that Congress “often enacts multiple overlapping statutes” in this area and that Section 122 of the Trade Act of 1974 and IEEPA “work together.”
Judge Prost asked Schumate if the limits in IEEPA were “judicially reviewable.” Schumate indicated that “the limits in Section 1702 are reviewable,” but that he disagreed “that 1701 is reviewable.” Schumate, however, maintained that “the fact that there’s no judicial review doesn’t mean the President isn’t bound by the law” because “Congress itself can review the declaration of an emergency and terminate that.”
Judge Hughes asked Schumate why the Federal Circuit should “assume that in this specific context Congress would have intended ‘regulating’ to mean the power to tax . . . keeping in mind that tariffs have long been a function of Congress.” Schumate indicated that the government was “not relying only on the word ‘regulate’, but ‘regulate any importation,'” which he claimed was “similar to ‘adjusting imports'” or “‘restricting imports.'” Judge Hughes questioned Schumate’s stance, pointing out that these “are things Congress did, not the executive.” Judge Hughes also pointed out that, while Congress can delegate the power to impose things along the lines of taxes, “we acknowledge that every time they use the word ‘regulate,’ it doesn’t include the power to tax.”
A judge later asked Schumate what threat the government was using to justify President Trump’s tariffs, noting that she could not “see in the briefs where there was any attempt to distinguish between the various reciprocal or trafficking tariffs based on the varying amounts of those tariffs.” Schumate responded by arguing that the plaintiffs “don’t challenge any of the rates” and that “this court’s precedent has been very clear . . . that you don’t review the President’s rationale.”
Another judge asked Schumate about the “deals with” language in IEEPA and what the four limits in IEEPA were. Schumate indicated the government’s position “is that 1701 is not reviewable at all” and that, “even if it were reviewable, it would have to be extraordinarily deferential to the President.” Schumate maintained the government’s position is that President Trump’s tariffs “‘deal with’ the emergencies by giving the President leverage” in trade negotiations.
A judge asked whether “a trade deficit can be an extraordinary and unusual threat when we’ve had trade deficits for decades.” Schumate responded by arguing that IEEPA “delegates to the President discretionary choices.” When asked what the Federal Circuit could “do as a court to cabin the President’s authority . . . if everything that he does is nonreviewable,” Schumate responded by arguing the Federal Circuit “can check whether the President complied with Section 1702.” Moreover, he said, the nondelegation doctrine is not implicated because Section 1702 of the IEEPA was “an enforceable standard.”
Finally, a judge asked Schumate why President Trump wouldn’t “rely or utilize all the other trade relief statutes that are in the books right now.” The judge suggested that if the Federal Circuit adopted Schumate’s argument, it would “dislocate that entire U.S. trade relief framework.”
Neal Katyal argued for V.O.S. Selections, Inc., Plastic Services and Products, LLC, MicroKits, LLC, FishUSA Inc., and Terry Precision Cycling LLC. He began by claiming the Federal Circuit had “just heard an argument . . . that our Federal courts are powerless” and “that the President can do whatever he wants, whenever he wants, for as long as he wants, so long as he declares an emergency.” Katyal argued this is “as major a question as it gets, . . . and the consequences are staggering.”
Chief Judge Moore questioned Katyal, asking if the Federal Circuit could review the language in IEEPA, the standard the Federal Circuit ought to use, and how detailed the Federal Circuit’s review should be. Katyal argued “IEEPA has a freestanding requirement of an ‘unusual and extraordinary threat’ in the statute” and “Congress imposed a freestanding requirement about ‘unusual and extraordinary.'”
Judge Taranto asked Katyal why the plaintiff’s brief did not have anything to say “about the usualness or ordinariness of the manufacturing deficiencies” that were itemized in President Trump’s Executive Order. Katyal argued “the President’s executive order isolates the trade deficit and [its] consequences,” which have been “persistent for half a century.” He said the President cannot declare a “slow boil kind of emergency” since “[t]hat isn’t the point of what IEEPA is about.”
A judge asked Katyal what “regulation of importation” means under IEEPA. Katyal maintained it permits “quotas, like limiting the number of goods,” and “licensing requirements.” But, he said, “[t]he one thing that I think it excludes for sure is tariffs.” Katyal noted that, “as Judge Reyna was pointing out, every single time Congress has given the President tariff authority, they’ve done so expressly with words.” He said IEEPA is “a statute that doesn’t mention tariffs whatsoever.”
A judge then asked Katyal to “distinguish between limits” that were in the court’s precedent. Katyal argued the court’s precedent “wasn’t approving in advance any future surcharge of a different nature or sanctioning the exercise of an unlimited power, which would strike a blow to our Constitution.” Katyal indicated that, even if the government’s stance was correct, “then they’re going to run surely afoul of the major questions doctrine.”
Another judge asked if the Federal Circuit even needed to “reach the broader question” if “the only way you get tariffs into ‘regulate’ here” is through the court’s precedent. Katyal indicated the Federal Circuit “wouldn’t have to reach” any broader question and “could reaffirm what the CIT did.” Katyal maintained “the real problem” the government faces with its argument is “the major questions doctrine.”
Judge Stark asked Katyal to “respond to the government’s argument that we kind of know from context when ‘regulate’ includes the power to tax and when it doesn’t.” Katyal argued the “context of no trade law in 200-plus years that has been interpreted to give the President this power” and “the context of every statute that gives the President the power to tariff that expressly says so” means that “regulate” under IEEPA does not include the power to tax.
Judge Stark then asked Katyal what he made of the government’s argument that IEEPA is similar to “the FDA Act, where the FDA is given authority to regulate [and] can impose taxes because it can regulate.” Katyal maintained there is “nothing in IEEPA . . . that suggests that the President would have the power to regulate tariffs or taxation.” In addition, Katyal argued, even if the government’s argument was right, “they’ve got to overcome the major questions doctrine” because “[t]hey are asserting a sweeping of power as one imaginable, with, as Chief Judge Moore pointed out, no judicial limits.”
Judge Hughes suggested “[t]here are at least two statutes . . . where Congress conferred the power to regulate,” and “regulation doesn’t necessarily exclude tariffs.” Katyal responded by arguing “there are many cases that say that the power to tax includes the power to regulate,” but “there are no reverse cases that say the power to regulate includes the power to tax.” He said “these are two fundamentally different decisions.”
Katyal then addressed an earlier question about a balance of payments. Katyal maintained that he did not “think that there’s a difference between balance of payments and trade deficits.” Moreover, he said, “the unusual and extraordinary threat language isn’t met” because “the President has himself called exactly this problem persistent . . . for the last half century.”
Finally, a judge asked Katyal if the clear statement rule would be implicated if the Federal Circuit “were to conclude that there was legislative ratification by Congress” of a judicial “interpretation of ‘regulate importation.'” Katyal responded by arguing the “major questions doctrine would overwhelm any kind of statutory ratification argument.” He said if the Federal Circuit adopted the precedent’s view of “regulation” then “Congress has adopted a statute which is unconstitutional on its face.”
Benjamin Gutman argued for the States of Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont. Gutman began by indicating that the States’ stance in this case was that the Trade Act of 1974 “gives authority for tariffs to deal with large and serious balance of payments deficits, but it puts limits on those tariffs.” In particular, he said, IEEPA’s general authority “doesn’t allow the President to defy Section 122’s specific limits.”
A judge asked Gutman if he thought “Congress could have had in mind that the President has more authority in IEEPA in unusual circumstances” such as “when they’re large and serious.” Gutman responded by claiming that Section 122 “directly addresses and covers and sets limits” for a large and serious trade deficit. Gutman maintained the federal government was “misreading” the court’s precedent that “discusses emergency and non-emergency powers.”
Another judge then asked why the States’ brief was devoted to “the more narrow question of trade deficits alone as not amounting to an unusual and extraordinary threat,” without commentary on the rest of President Trump’s executive order. Gutman responded by arguing that “the trade deficits are what the President was claiming as the justification for the action.” Ultimately, Gutman claimed, President Trump’s reciprocal tariffs were unlawful “either because they exceed what regulate means in this context or because IEEPA just doesn’t allow tariffs at all.”
A judge asked Gutman what work “regulate importation” does in IEEPA if “it doesn’t cover tariffs.” Gutman maintained that “[r]aising revenue is fundamentally different from regulating commerce,” and that “the Supreme Court has recognized that they’re different.”
Another judge asked Gutman about President Trump’s “trafficking tariffs,” asking if the Federal Circuit would “have to reverse the CIT on the trafficking tariffs” if “regulate” allows some trafficking but there was a problem with the “deals with” language in IEEPA. Gutman maintained the States would “still have an argument” that “the term ‘regulate’ still only connotes modest modifications.”
Finally, a judge asked Gutman what his response would be if the Federal Circuit concluded “there was some form of legislative ratification here” that the phrase “regulate importation” permits the authorization of tariffs. Gutman responded by maintaining the court’s precedent says repeatedly that it “is not sanctioning an unbounded exercise of tariffing authority.” According to Gutman, it “doesn’t allow the breadth of authority that would be required to sustain the tariffs here.”
On rebuttal, Schumate argued that, “in the context of an emergency statute, Congress intends for those statutes to be interpreted very broadly, and the court has to look to specific limits in the statute itself.” When asked if that is how modern courts still interpret statutes, Schumate argued that courts still “give broad deference to the President and interpret statutes broadly” in “the foreign affairs and national security context.”
A judge, after suggesting President Trump’s executive order is “a wholesale revision of the scheme that Congress enacted in the harmonized tariff schedule,” asked if the government was asking “for an extraordinary change to the whole approach of tariffs” reflected in this schedule. Schumate responded by stating that IEEPA “is a broad statute that delegates the President broad authority.” Furthermore, he said, if “Congress disagrees with that action, of course, Congress can step in and check the President.” Schumate suggested that the real question the Federal Circuit should consider is whether President Trump contravened “any specific limit” in IEEPA itself. Schumate maintained that both the private party plaintiffs and the States “have not carried their burden” to show President Trump violated a specific limitation in IEEPA.
Another judge asked Schumate if the government’s position was that President Nixon’s proclamation addressed by the court’s precedent was “equally wholesale in terms of the number of countries it impacted and the number of goods it impacted.” Schumate confirmed that this was the case. Schumate was then asked whether the same precedent applied to President Trump’s actions, since previously the precedent “only applied in the situation where the President had increased the rates and . . . was now decreasing” the rates. Schumate suggested “the fact that the President’s action in this case may be broader than President Nixon’s action doesn’t make this action illegal unless the plaintiffs can point to any specific violation of the statute.”
Finally, a judge shifted Schumate to “the constitutional question,” asking how the standards of unconstitutional delegation can apply “if the substantive standards of the delegation are not enforceable in some way.” Schumate argued “the case law says that the President’s discretionary decisions are not reviewable.” And, he said, the only thing the Federal Circuit can review is “whether the President contravened any limits on his authority in Section 1702” of IEEPA. Schumate maintained that “the primary role is for Congress to check the President if there is an abuse of the IEEPA tariff.”
We will continue monitoring this case and report on further developments.