The Case Against IEEPA Tariffs

Speaking to reporters in the Oval Office this week, President Trump said he will impose 25 percent tariffs on imports from Canada and Mexico as early as tomorrow, Feb. 1. Even if this latest tariff threat gets pushed off for several weeks or months, Trump’s expansive tariff plans mean that U.S. courts will likely have to rule this year on whether a president can impose tariffs under the International Emergency Economic Powers Act (IEEPA), a 1977 statute that provides the president with extensive powers to address national emergencies. Although IEEPA has never been used to impose tariffs, President Trump and his advisers have repeatedly indicated that they see IEEPA as a potential legal basis for their expansive tariff ambitions.

For Trump, IEEPA’s appeal is clear: Unlike most laws that delegate authority over trade to the president, IEEPA requires minimal procedural hurdles. President Biden, for example, used IEEPA to bring sweeping sanctions into force on Russia within hours of Russia invading Ukraine. By contrast, the first Trump administration took 11 months in 2017 and 2018 to implement its first tariffs on China, pursuant to Section 301 of the Trade Act of 1974. Trade laws generally require that tariffs target specific countries or specific products, creating challenges to Trump’s stated goal of imposing a 10 percent or 20 percent “universal” tariff. IEEPA, if it authorizes tariffs, potentially allows Trump to tariff the world within days. 

Courts have traditionally accorded presidents wide latitude in their use of IEEPA, and may well find that IEEPA does allow the president to impose tariffs. But it is important to weigh the arguments on the other side. Forcing Trump to rely on trade statutes—or to go to Congress to seek new authorities—would be consistent with IEEPA’s history and practice, and with Congress’s long-standing practice of delegating trade power to the president only subject to more extensive procedural requirements. Arguments against IEEPA tariffs are particularly strong with respect to Trump’s proposed “universal tariff,” which courts should scrutinize under the Supreme Court’s emerging “major questions doctrine.”

The History and Use of IEEPA

Congress enacted IEEPA in 1977 as part of a package of reforms designed to reduce the president’s use of emergency powers, which presidents had invoked frequently over the prior decades. In particular, Congress wanted to limit the expansive powers that presidents had under Section 5(b) of the Trading with the Enemy Act of 1917 (TWEA). Congress enacted TWEA in the months after the United States entered into the World War I to provide the president with expansive powers to block enemy property, regulate financial transactions, and regulate and license imports and exports, all necessary in wartime.

On the whole, successive presidents continued to use TWEA during wartime or to impose sanctions on countries like North Korea and Communist China, but some presidents had also deployed TWEA for other purposes, including President Roosevelt’s bank holiday in 1933, controls on U.S. investment abroad in 1968, and the maintenance of peacetime export controls on the Soviet block after Congress allowed export controls laws to lapse. But in the wake of the Watergate scandal, Congress was keen to reign in executive power, and TWEA was in its sights. 

Congress began by passing the National Emergencies Act in 1976, which laid out a formal process for the president to declare a national emergency and unlock emergency powers. A year later, 1977 Congress passed PL-95-233, which limited TWEA to times of war while providing the president with new powers to address genuine peacetime emergencies. Thus, IEEPA was born.

Congress structured IEEPA to provide the president with many of the powers of TWEA, but subject to additional limitations. These included procedural limitations: To invoke IEEPA, presidents must declare a national emergency pursuant to the National Emergencies Act, and to sustain IEEPA actions for more than a year, presidents must submit an annual declaration to continue the emergency. Congress also gave itself the power to overturn IEEPA actions with a concurrent resolution, which, at the time, was not subject to a presidential veto.

IEEPA’s text carried over many of TWEA’s provisions, while making amendments to others. TWEA Section 5(b), which enumerated many of the president’s TWEA powers, was generally carried over into IEEPA Section 203, the IEEPA provision delineating presidential powers, which is codified at 50 U.S.C. 1702. Unlike TWEA, however, IEEPA does not provide the authority to regulate purely domestic transactions, and Congress imposed limitations (subsequently expanded) so that IEEPA could not be used to regulate non-economic transactions such as personal communications and certain humanitarian donations.

Congress intended IEEPA to be used sparingly. The House report accompanying the law stated that “emergencies are by their nature rare and brief, and are not to be equated with normal, ongoing problems.” But, in practice, presidents soon began to use the statute expansively, relying on IEEPA to sustain sanctions and other international economic relations for years while lowering the threshold for declaring an “emergency.” The Treasury Department currently maintains more than 30 IEEPA-derived sanctions programs, several of which date back decades. Contemporary sanctions programs address not only acute emergencies like wars and terrorist attacks but also persistent global problems such as corruption and human rights abuses. Moreover, presidents have used IEEPA to impose a dizzying array of restrictions. These include bans on imports and exports, such as the IEEPA-derived trade sanctions President Biden imposed on Russia after it invaded Ukraine in February 2022. Across multiple U.S. sanctions regimes, IEEPA serves as the legal basis for asset freezes against 17,000 individuals, companies, and government entities. More recent uses of IEEPA include establishing a regime to control U.S. investment in China; to prohibit the use of Chinese internet-connected cars in the United States; and to restrict certain bulk data transfers to China, Russia, and other designated adversaries.

Faced with this expanding use, courts have generally proved deferential to a president’s use of IEEPA. In 1981’s Dames & Moore v. Regan, the Supreme Court found that IEEPA’s text and history, and the case law surrounding TWEA, “fully sustain the broad authority of the Executive when acting under this congressional grant of power.” Several circuit courts of appeals have upheld IEEPA against challenges that it represents an unconstitutionally broad delegation of congressional power, and courts have generally rejected claims that IEEPA sanctions entail unconstitutional takings of private property. The Supreme Court also gutted one of IEEPA’s primary procedural checks with a 1981 ruling that concurrent resolutions overturning executive branch actions are unconstitutional—making it effectively impossible for Congress to overrule an IEEPA action absent a veto-proof majority.

Yet there are signs that judicial deference may be eroding, at least at the margins. In the 2000s, after the Bush administration deployed sanctions on several American charities it alleged had ties to terrorist groups, courts found that IEEPA asset freezes against Americans are subject to Fourth Amendment restraints on unreasonable searches and seizures. In 2020, courts determined that IEEPA did not authorize then-President Trump to ban Chinese-owned social media apps TikTok and WeChat. (Those judicial decisions ultimately forced Congress to pass a separate law in 2024 requiring TikTok’s Chinese parent to either divest TikTok or see the app banned—a ban that came into force briefly before Trump on Jan. 20 directed the Justice Department to decline to enforce it for several months.) In 2024 the Fifth Circuit found that IEEPA’s definition of “property” was not sufficiently broad to include “immutable smart contracts” on a blockchain, noting the Supreme Court’s 2024 Loper Bright decision overturning Chevron deference to agency interpretation of statutes. It is, after all, now the role of courts to “determine the ‘best’ reading of a statute; a merely ‘permissible’ reading is not enough.”

The Arguments Against IEEPA Authorizing Tariffs

Article 1, Section 8, of the Constitution gives Congress authority to set tariffs and to regulate commerce with foreign nations. The president’s power to impose tariffs thus arises from authorities delegated to him by Congress. Despite presidents’ extensive use of IEEPA over the decades and the courts’ general deference, there are a number of arguments against reading it to provide the president with the power to impose tariffs.

The first of these is a plain reading of the statute. The powers IEEPA provides in 50 U.S.C are, by their text, quite broad. These include the power to, “by means of instructions, licenses of otherwise,” “investigate, regulate, or prohibit,” any foreign exchange transactions; payments or transfers of credit that involve a foreign country or national; and the import or export of currency or securities. They also authorize the president to “investigate, regulate, … prevent or prohibit, any acquisition, holding … use, transfer, withdrawal, transportation, importation or exportation of, or dealing in” any property in which a foreign country or foreign national has an interest.” This language empowers the president to prohibit or limit the import or export of goods—the basis for IEEPA longstanding use to impose trade embargoes.

Notably, however, this list does not explicitly include the power to “tariff” or to “tax.” Given detail of the list, this is a significant omission—and one that is all the more notable given how clearly Congress has referenced tariff authorities in other trade statutes. It is also notable that across the many uses of IEEPA since its passage 48 years ago, not once has a president used IEEPA to impose a tariff.

Given no president has ever used IEEPA to impose a tariff, the strongest case law supporting IEEPA tariff powers is a 1975 case interpreting Section 5(b) of TWEA, United States v. Yoshida International. In August 1971 the Nixon administration imposed a temporary 10 percent tariff on many goods to address potential balance of payments problems, simultaneous to withdrawing the U.S. from the gold standard. Yoshida, a Japanese zipper manufacturer, challenged the tariffs. 

Nixon had not actually cited TWEA Section 5(b) in his proclamations imposing the tariffs, fearing that doing so would alienate allies opposed to being labeled “enemies,” but his administration cited it in the litigation. In upholding Nixon’s tariffs, the Yoshida court found that the “express delegation” of power in TWEA “is broad indeed” and that that a power to impose tariffs derived from the power to “regulate” imports Moreover, the Court found that the “limited nature” of Nixon’s tariffs did not make Congress’s delegation of its tariff power unconstitutionally broad.

But reliance on Yoshida to interpret Section 1702, even if Yoshida correctly interpreted TWEA, runs into IEEPA’s history. Yes, the relevant text of 1702 is the same as the language in TWEA 5(b) at issue in Yoshida. But Congress’s overarching objective with IEEPA was to narrow the scope of the president’s powers while continuing to provide the president with adequate authorities to address genuine emergencies. As the House Report accompanying IEEPA stated, the goal was to convey “upon the President a new set of authorities for use in time of national emergency which are both more limited in scope than those of [[TWEA]] and subject to procedural limitations.”

The Report also made no explicit statement that Congress intended IEEPA to authorize tariffs. Instead, the Report noted that in testimony related to the bill, the Justice Department had identified four important TWEA powers: (1) regulatory powers with respect to foreign exchange, banking transfers, currency, and securities; (2) regulatory powers over property in which foreign nationals have an interest; (3) the power to vest foreign-owned property; and (4) the power to liquidate and deal with foreign owned property for the benefit of the U.S. The only reference in the report to tariffs was a historical narrative, alongside other historical uses of TWEA, of the fact that Nixon had imposed tariffs when he withdrew the U.S. from the gold standard and that Yoshida court had upheld the tariffs “on the grounds that the existence of the national emergency makes [TWEA] Section 5(b) available for purposes which would not be contemplated in normal times.”

Moreover, following Nixon’s 1971 TWEA tariffs, and while the Yoshida litigation was still winding its way through the courts, in 1974 Congress passed a specific trade law provision, Section 122 of the Trade Act of 1974, that authorized a global tariff of up to 15 percent for no more than 150 days to address balance of payments issues. While IEEPA’s legislative record does not appear to make specific reference to Section 122, Congress considered IEEPA against a backdrop in which it had already separately authorized the type of tariff at issue in Yoshida—and chose to make that tariff subject to limits in both scope and duration.

The final—and likely most persuasive—argument against IEEPA as the basis for tariffs applies particularly to the type of “universal baseline” tariff of 10 percent or 20 percent that Trump has floated as a tool to raise revenue and rebuild manufacturing. In recent years an emerging line of Supreme Court jurisprudence has established a “major questions” doctrine that holds Congress must clearly state its intent to give the president authority to take particularly momentous regulatory actions, and that presidents cannot simply rely on ambiguous, decades-old statutes as the basis for sweeping policy changes. In 2022, in West Virginia v. EPA, the Supreme Court cited the major questions doctrine to strike down a Biden administration effort to reinterpret provisions of the Clean Air Act exacted in 1970 as allowing the EPA to broadly regulate greenhouse gas emissions. In 2023, in Biden v. Nebraska, in the Court cited the doctrine to strike down Biden’s efforts to forgive hundreds of billions of dollars in student debt. As the Court wrote to explain its reasoning in West Virginia, “in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there …. The agency instead must point to ‘clear congressional authorization’ for the power it claims.” 

A new universal tariff should count as a major question. Given U.S. imports are estimated at $3 trillion in 2024, a 10 percent tariff would result in $300 billion in new annual taxes. Economic estimates have indicated that a universal tariff of 20 percent could cost a typical U.S. family nearly $4,000 annually. These impacts are at least as dramatic as those at issue in West Virginia and Nebraska.

Indeed, the rise of the major questions doctrine is not the only argument against IEEPA tariffs: Even the Yoshida court indicated it would not have upheld a long-term, universal tariff. In response to arguments that Congress could not fully delegate its trade powers to the president, the Yoshida court noted that Nixon had not truly imposed a 10 percent universal tariff, but had rather adjusted specific rates on specific goods, with total rates never exceeding a statutory maximum. Moreover, Nixon had intended the tariff to be temporary. “Far from attempting, therefore, to tear down or supplant the entire tariff scheme of Congress,” the court found, “the President imposed a limited surcharge, as ‘a temporary measure’ calculated to help meet a particular national emergency, which is quite different from ‘imposing whatever tariff rates he deems desirable.’” IEEPA’s use since 1977 offers scant evidence that IEEPA tariffs imposed today would be similarly temporary in scope or duration.

While the major questions doctrine is at its strongest with respect to a universal tariff, courts should also apply it to more broadly limit potential IEEPA tariffs. Presidents have and will use IEEPA in myriad circumstances, and courts will find it all but impossible to delineate a principle differentiating IEEPA tariffs in targeted cases from a universal tariff. There simply is no clear judicially administrable principle to distinguish a 25 percent tariff on a single country from a 20 percent tariff on half of America’s trading partners from a 10 percent tariff on all of them. Courts should simply find that tariffs are outside the powers enumerated in IEEPA.

Other Presidential Powers to Prosecute Trade Wars

Even without IEEPA, President Trump has numerous legal tools to pursue his trade agenda. Section 301 of the Trade Act of 1974 provides the U.S. Trade Representative with wide authority to investigate trade partners for unfair trading practices and to impose tariffs to persuade them to change their practices. Section 232 of the Trade Expansion Act of 1962 affords the president the power to impose tariffs on specific critical products, like steel, if the Department of Commerce determines via investigation that imports of those products undermine U.S. security. U.S. anti-dumping, countervailing duty, and safeguard tariff authorities allow the Trump administration to protect U.S. industries suffering from subsidized or below-cost imports, or an unexpected surge of imports that hurts U.S. producers. President Trump’s Jan. 20 “America First Trade Policy” executive order also directs his administration to review several older trade law provisions that remain on the books, including provisions of the Trade Act of 1930 (better known as the Smoot-Hawley Tariff Act), and the Tariff Act of 1916, that could potentially serve as the basis for some of Trump’s tariff plans.

From Trump’s perspective, the problem with these other statutes is that they require far more administrative processes to implement than does IEEPA, and/or contain limits in scope—for example, authorizing tariffs only against specific products, or only for a specific amount of time. While Trump could lawfully rely on these other tools to hike tariffs on many products and trading partners, doing so would take time and administrative effort, and likely fail to cover the full range of countries and products that Trump wants.

But the fact that other trade authorities require process and impose limits to their use is precisely why courts—not to mention members of Congress—should insist that President Trump rely on them. There are many arguments that Congress should more broadly reform IEEPA to exercise greater oversight, even aside from any potential tariffs. At the very least, however, courts should find that allowing Trump to waive his magic sharpie to sign an IEEPA executive order imposing tariffs would upset the balance Congress has long sought to strike when it delegates its tariff authority to the president.