The Jurisdictional Battle Over Which Court Will Adjudicate the Trump Tariff Challenges

Photo by Juliana Kozoski on Unsplash

Last week, two courts enjoined the Trump administration tariffs that Trump purported to promulgate by executive order pursuant to the International Emergency Economic Powers Act (IEEPA). In a May 28 ruling in V.O.S. Selections Inc. v. U.S., the Court of International Trade (CIT) issued a permanent injunction against the government defendants, and in a May 29 ruling in Learning Resources v. Trump, Judge Rudolph Contreras of the District of D.C. issued a preliminary injunction against President Trump and the associated government defendants. Both courts held that the tariffs exceeded the President’s authority under IEEPA, although the Federal Circuit has stayed the CIT’s injunction pending its review of the decision. One can expect the government to challenge both the substantive and procedural aspects of the lower courts’ decisions. This post addresses the procedural challenges and argues that the CIT should exercise exclusive jurisdiction over these cases not only because the lawsuits fall within the subject matter jurisdiction granted by Congress, but also because this means that the litigation will be consolidated before a politically balanced court with nationwide jurisdiction.

A Primer on the CIT and its Nationwide Jurisdiction

Since President Trump issued the executive orders on tariffs, a number of plaintiffs have filed lawsuits challenged their legality. The plaintiffs include importers, businesses who must source goods and parts from overseas, and states who argue that the tariffs impact the “cost of imported goods that are ‘essential’ to the states’ provision of public services.” Some of these suits were filed directly in the CIT, while others have been filed in various district courts around the country. Some judges have transferred such cases to CIT, finding that CIT has exclusive subject matter jurisdiction over the actions. Others, notably Judge Contreras in the Learning Resources case, have retained the actions.

These lawsuits challenging the legality of the tariffs are part of a broader debate about the federal courts’ power to enjoin allegedly unlawful or unconstitutional executive actions. Opponents of nationwide injunctions argue that such injunctions allow litigants challenging executive orders to forum- and judge-shop, and they worry that such injunctions effectively create de facto national class actions by altering government conduct toward nonparties.

These critiques don’t necessarily apply to the CIT, however. The CIT, which has exclusive jurisdiction over the trade and customs issues enumerated in 28 U.S.C. § 1581, is an Article III court with nationwide jurisdiction. Moreover, in this highly politicized moment, it is notable that the CIT is a court consisting of nine judges, no more than five of whom can be from the same political party. (This feature of the CIT has not been aggressively challenged, even though the “political diversity requirement” raises questions about the constitutionality of the court’s design).

In addition, Congress has authorized the CIT to hear cases as a three-judge panel when the chief judge of the CIT finds that a case:

(1) raises an issue of the constitutionality of an Act of Congress, a proclamation of the President or an Executive order; or (2) has broad or significant implications in the administration or interpretation of the customs laws. (28 U.S.C. § 255(a)).

Thus, unlike the bogeyman of nationwide injunctions—a politicized “single judge in a single geographic district” who wields outsized power beyond their chambers and district—challenges to executive orders before the CIT are likely to be heard before a three-judge panel of judges with nationwide jurisdiction who have subject matter expertise in customs and trade law and are drawn from a politically balanced pool. Indeed, the IEEPA cases were handled by a three-judge panel, as were some of the high-profile challenges to the tariffs promulgated by the first Trump administration.

While the design of the CIT does not assuage every concern lodged by critics of nationwide injunctions, Congress has designed the court to be well-situated to resolve disputes with nationwide scope and obvious implications for foreign relations.

Are Ultra Vires Tariffs Still Within the CIT’s Exclusive Jurisdiction?

The broad, nationwide jurisdiction of the CIT is offset by its narrow subject matter jurisdiction, designed to ensure that only certain trade and customs matters appear before the court. This raises a thorny jurisdictional question: if the challenge to a tariff is that it is unlawful and/or unconstitutional because it is not a “tariff” at all, or was promulgated pursuant to a statute that does not authorize the President to issue or alter tariffs, then which court has the authority to hear the challenge? In other words, does the CIT’s exclusive jurisdiction still attach?

In its ruling enjoining the tariffs, the CIT found in favor of its own jurisdiction. While the CIT was probably correct, it is worth examining the arguments in favor of keeping the litigation in the general district courts. The heart of the argument is a conundrum: if IEEPA never authorized the President to issue tariffs in the first place, how can IEEPA be a “law of the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue”? (28. U.S.C. § 1581(i)).

This chicken-and-egg problem is not unique to the CIT and tariff challenges. Courts have long struggled with “the inextricable merits problem” in determining the personal and subject matter jurisdiction of the courts. If the purpose of jurisdictional doctrines is to provide a threshold channeling function, how far into the merits of a case can or should a judge go in order to determine the jurisdiction of the court?

According to Judge Contreras, once he held that IEEPA does not authorize promulgation of tariffs, this was also conclusive of jurisdiction “because IEEPA is not a ‘law . . . providing for tariffs,’” such that “this Court, not the CIT, has jurisdiction over this lawsuit.” Most of the Learning Resources opinion is devoted to his analysis of the constitutional and statutory problems with the IEEPA tariffs. His observation that “IEEPA does not use the words ‘tariffs’ or ‘duties,’ their synonyms, or any other similar terms like ‘customs,’ ‘taxes,’ or ‘imposts [sic]’” is dispositive of the jurisdictional question. Judge Contreras implies that it is only plaintiffs’ arguments that concern tariffs, not the underlying law.

But as the CIT emphasized in its decision, IEEPA is not the only federal law in play. Plaintiffs are not challenging IEEPA in isolation; rather, they are challenging duly issued executive orders that purport to be promulgated pursuant to IEEPA. According to the CIT, the Executive Orders themselves are “‘law[s] providing for’” tariffs within the meaning of § 1581(i). The CIT goes on to explain:

The Federal Circuit has confirmed that presidential action creates an appropriate basis for [§ 1581](i) jurisdiction, noting without disapproval that there are “numerous cases in which the Court of International Trade has. . . . considered challenges to the actions of the President pursuant to the grant of jurisdiction in § 1581(i) . . .

This means that Plaintiff’s various challenges to the presidential actions here, successful or not, fall under this court’s exclusive jurisdiction. (emphasis added)

This reading makes sense as a matter of policy. One of the purposes of the CIT is to promote uniformity in the interpretation and application of customs and trade laws and regulations. The CIT provides a central and nationwide hub for such dispute resolution. (In more ordinary customs disputes, this discourages a form of forum shopping in which importers favor certain ports of entry because the law of one circuit might have a more favorable classification or rate determination than another). But in these cases of national policy determination, the centralization serves another function. Under the Learning Resources approach, the president can further weaponize the ultra vires use of IEEPA “authority” to lurch the economy this way and that by broad impositions of tariffs that lack the sector-specific basis or procedural steps required by other trade laws (such as section 232 and 301 tariffs). To deny subject matter jurisdiction to the CIT on the grounds that these are not “tariffs” is to invite the president to exploit the possibility of multiple and inconsistent decisions to create more chaos. (Note that in the current cases, some plaintiffs have chosen to file suit before the CIT, while others have resisted the CIT’s jurisdiction when the government has moved for transfer to the CIT).

Moreover, the CITs decision is more consistent with broader theories of how Article III courts determine their own jurisdiction and dispose of cases. For example, a federal court can retain jurisdiction over state law claims even if the federal cause of action is ultimately dismissed from the case. Likewise, if a plaintiff’s ultimate recovery in a diversity action is lower than the jurisdictional threshold in 28 U.S.C. § 1332, this does not deprive the court of subject matter jurisdiction. And a court always has “jurisdiction to determine jurisdiction,” even when these issues raise complicated questions of jurisdictional sequencing. The purpose of these doctrines is to balance the need for protecting the limited jurisdiction of the federal courts with the need for courts to properly exercise their jurisdiction without a costly and redundant merits investigation of the underlying action.

These policy considerations support the CIT’s interpretation of § 1581(i) that presidential action with regard to tariffs is indeed a “law” within the meaning of the statute, especially when that action takes the form of a written executive order that, if licit, carries the force of law.

It seems that Judge Contreras’s (quite understandable) fear is that even a finding of CIT jurisdiction would give the IEEPA “tariffs” a whiff of legitimacy.  (Indeed, some legal commentators have made precisely this argument.) Thus, for him, the jurisdiction conclusion was inextricably linked to his merits analysis. But the reverse might be even more frightening. To suggest that the CIT lacks jurisdiction to regulate these executive orders as tariffs is to suggest that the president might in fact have some residual power, contrary to principles of the separation of powers, to issue free-floating “tariff-like” duties that are somehow not tariffs that can be adjudicated like all other duly promulgated tariffs.

Put another way, Judge Contreras’s ruling enables the following troubling result: Suppose that a federal district court holds that IEEPA does authorize the President to issue tariffs under its emergency powers, and that this interpretation of the statute means that the case must fall under the CIT’s exclusive jurisdiction. The court then transfers the case to the CIT, which, in turn, comes to the opposite conclusion, holding that IEEPA does not authorizes tariffs. If the CIT then held (unlike its actual holding in V.O.S. Selections) that this holding necessitates a finding that the CIT also lacks subject matter jurisdiction, then there are now no courts that claim subject matter jurisdiction over the case, and the tariffs become unreviewable.

This is why a filing in the CIT does not “give up the game” as to IEEPA’s scope, simply by acknowledging the CIT’s jurisdiction to adjudicate cases about tariffs. Instead, it acknowledges that the scope of a court’s subject matter jurisdiction is not completely coterminous with determinations of the underlying merits.