Supreme Court to hear expedited review on legality of White House IEEPA tariffs this week

With oral arguments on the legality of legality of tariffs implemented by the White House under the International Emergency Economic Powers Act (IEEPA), in the form of an expedited review, set to begin this week on Wednesday, November 5, much remains to be seen, in terms of the potential outcome and where things go from there, before a definitive outcome is reached.

As previously reported, the White House filed a in early September, calling on the Supreme Court to expedite an appeal on its behalf, following a recent ruling by the U.S. Court of Appeals for the Federal Circuit, which stated the majority of the IEEPA (International Emergency Economic Powers Act) tariffs rolled out by the White House are illegal. Tariffs will remain temporarily in place until October 14, which will give the White House time to appeal its case to the Supreme Court.

This ruling was similar to one made in May, when a three-judge panel at the U.S. Court of International Trade (CIT) ruled that President Trump had misused the International Emergency Economic Powers Act (IEEPA) of 1997, in steps he took to implement tariffs on various consumer and industrial products, including the 10% global tariff on U.S. trading partners, 25% tariffs placed on Canada and Mexico, 30% tariffs on China related to fentanyl and border crisis concerns, the elimination of the de minimis exemption on imports from China and called for a permanent halt of the majority of tariffs and also ruling against future modifications against them, the White House received a reprieve one day later.

In its motion, the White House explained that the Federal Circuit’s ruling has created what it called legal uncertainty and is undermining U.S. diplomatic and economic interests, including ongoing trade negotiations with South Korea, the European Union, and Japan.

Greg Husisian, partner and litigation attorney with Foley & Lardner LLP, told LM that until the Supreme Court eventually issues a ruling, tariffs continue unabated at the current higher levels.

“Congress has largely abdicated its role in setting tariffs, which are just a particular type of tax,” he said. “So, it's supposed to be with them, and they have not been pushing back on President Trump. The [White House] trade team is continuing to negotiate tariffs with partners abroad and looking to expand on the deals that have already been announced and are also moving forward with USMCA negotiations. Everyone is wondering if these [IEEPA] tariffs are even lawful—and more importantly, it is expected that the White House is just going to shift to a different legal basis for them.”

Should the Supreme Court rule against the tariffs, he said that the White House will have backup plans in place, such as switching to Section 232 (related to national security) or Section 301 tariffs (related to unfair trade practices) or possibly Section 338 tariffs, giving the President the authority to impose tariffs on goods from foreign countries that are found to be imposing unfair or discriminatory burdens on U.S. commerce. 

That was made clear in a September LinkedIn post, Pete Mento, former Director Global Customs, at DSV, in which he noted that the outcome of this case could result in as much as $30 billion in possible tariff refunds. And he observed that with the Supreme Court expediting the briefing schedule to address arguments in the case during the first week of November, this accelerated review shortens the timeline for the involved parties, condensing a process that typically spans months into a matter of weeks.

“Despite the tight timeline, this swift approach could result in a final ruling on the highly anticipated appeal by year-end,” he wrote.

What’s more, there is also the question of what becomes of the duties already collected under the IEEPA tariffs, noted Husisian.

And with the federal government shutdown now intact for more than a month, Husisian observed that could potentially impact the ability of the public to opine and participate, due to the possibility of related delays, while U.S. Customs and port operations continue.

“The biggest uncertainty right now, is people are saying they don't know where things are going to end up because of the negotiations on the global and reciprocal tariffs, and we don't know what the Supreme Court is going to do, and whether it's going to be struck down,” he said. “And the longer the shutdown goes on, the more problematic it becomes.”

An update issued by San Francisco-based global freight forwarder Flexport said that if the Supreme Court upholds the federal appeals court’s ruling, CBP would halt all collection of IEEPA tariffs and many businesses would potentially qualify for duty refunds. It added that some duties would be proactively refunded by CBP, while others would require importers to file post summary corrections and protests.

Jonathan Todd, Vice Chair, Transportation & Logistics, for Cleveland-based law firm Benesch, told LM that, there are a few potential outcomes, depending on how the Supreme Court moves on its ruling.

“If the White House prevails, then these reciprocal duties and fentanyl-based duties are in place, and we keep paying those,” he said. “If the White House does not prevail, then the more interesting question of how monies are recovered enters the picture. Administration officials are already indicating that this is on their mind—that they may need to refund money collected if those were collected unlawfully. And then the second piece that enters the picture is the alternative. Every indication out of the White House is that it will continue valuing tariff actions as a means of revenue collection, and also means of managing foreign relationships and protecting domestic industry. The question will then become, which paragraph levers under U.S. law will the administration pull? And it's an administration that has pulled other levers in the past, and even recently. The Trump 45 administration used Section 232, tariffs which have national security interests. And this Trump administration has as well as did the Biden administration. And then the Trump 45 administration also used Section 301, tariffs which target unfair trade, essentially against China, and those continue through the Biden administration and to the President Trump administration.”

In addition to those examples, Todd said there are other tools available, but with the question of what they will be and how they will be rolled out still to be determined.

Should the Supreme Court rule against the IEEPA tariffs, Todd said that there will likely be investigations and opportunity for comments, which he said would be helpful for importers, with those tariffs largely commodity-focused, country-focused, and sector-focused. What’s more, he added that is a narrower approach to tariffs and also more legally defensible.

“Those are the things people are thinking about as we all wait to see what happens,” he said. “If monies are due back, how will that happen? There is not a good answer right now. Secondly, if the White House essentially loses, what alternative will it pursue?”