Tariffs on Trial: The Legal Fallout of Liberation Day

By Kristina Kianovski '27

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On April 2, 2025, Donald Trump unveiled “Liberation Day”—the largest implementation of tariffs the United States has ever seen. (1) These included worldwide and retaliatory tariffs to reset global trade reciprocity and trafficking tariffs, meant to punish countries allegedly facilitating trafficking of illegal goods into the U.S. (2) Unsurprisingly, this wasn’t well received by small and big businesses alike. With so many U.S. companies outsourcing labor, tariffs would have meant tight profit margins for some, and even bankruptcy for others. (3) In V.O.S. Selections, Inc. v. Donald J. Trump (“V.O.S.”), a group of small businesses filed a lawsuit against the tariffs, which was upheld by the U.S. Court of International Trade (USCIT). (4) Following the precedent they had created for themselves, USCIT issued a similar ruling in The State of Oregon et al. v. Donald J. Trump (“The State of Oregon”). (5)

Now, almost two months after Liberation Day, on May 29th, 2025, the Federal Court of Appeals has consolidated the two cases. (6) As the world waits to see whether an injunction will be placed on the president’s order, it is important to understand the basis of the V.O.S. and The State of Oregon rulings, as well as the historical place tariffs have had in United States history. 

What is the basis of the ruling in both V.O.S. and The State of Oregon? Well, both plaintiffs sought legal action against the worldwide and retaliatory tariffs that President Trump instated through executive orders 14193, 14194, and 14195. (7) The plaintiffs in the The State of Oregon case, additionally, contested the instatement of Trump’s trafficking tariffs in order 14197—a collection of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) meant to mitigate the smuggling of narcotics over the border and declaring a national emergency on the southern border caused by cartels and criminal gangs. (8) 

There are two main arguments against Trump’s implementation of tariffs:

1. The worldwide and retaliatory tariffs are a misuse of executive power and should belong to the legislative branch. 

2. The trafficking tariffs do not meet the requirements of the IEEPA. 

Arguments against the Worldwide and Retaliatory Tariffs

In both V.O.S. and The State of Oregon, the arguments against the worldwide and retaliatory tariffs have two basic premises: they violate the nondelegation doctrine, and they do not meet the requirements of the IEEPA in addressing a national threat. (9) 

The nondelegation doctrine claims that Congress cannot delegate its law-making ability to other entities. (10) This doctrine has come from various precedent cases, including A.L.A. Schechter Poultry Corp. v. United States, in which Congress distributed legislative authority to the President and various business groups. (11) By invoking the nondelegation doctrine, plaintiffs in V.O.S. and The State of Oregon claim that the president does not have “unbounded power over tariffs”. (12) 

This is supported by the IEEPA, in which the words “regulate...importation” do not explicitly promote any desirable tariff to be instated by the president. (13) In a 1971 case, United States v. Yoshida Int’l Inc., in which a Japanese zipper importer challenged import rates set by President Nixon, the court ruled in Nixon’s favor, claiming “...President Nixon “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.” (14) Using these precedents, as well as the claim that the worldwide tariffs do not meet the “national threat” premise of the IEEPA (since the tariffs are being applied to ally and peaceful countries as well), V.O.S. and The State of Oregon succeeded in convincing the U.S. Court of International Trade of the unconstitutionality of Liberation Day tariffs. (15) 

Arguments against the Trafficking Tariffs 

In The State of Oregon, the argument against the trafficking tariffs is that under the International Economic Emergency Powers Act, the trafficking tariffs do not meet the National Emergency requirement. (16) As a historical example of presidential tariff jurisdiction during a national emergency, we can once again look at United States v. Yoshida Int’l Inc.. In this case, the Trading with the Enemies Act (Referred to as “TWEA”, a wartime alternative to the IEEPA that grants the president a broader scope of importation regulations) was used to justify President Nixon’s importation restrictions. However, the court reasoned that Nixon’s actions were allowable  because TWEA “...authorized the President, during an emergency, to exercise the delegated substantive power, i.e., to ‘regulate importation,’ by imposing an import duty surcharge or by other means appropriately and reasonably related . . . to the particular nature of the emergency declared.” (17) Following this, Congress enacted what we currently know as the IEEPA, which was meant to be “...both more limited in scope than those of [TWEA] and subject to more procedural limitations, including those of the National Emergencies Act.” (18) 

Knowing that Trump declared the trafficking tariffs under the National Emergency Act, we need to ask whether the tariffs are mitigating the emergency. As previously mentioned, the IEEPA states that tariff authorities “may only be exercised to deal with an unusual and extraordinary threat, with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose”. (19) In The State of Oregon, the arguments of the plaintiffs for the trafficking tariffs were not meant to disprove that there was an unusual and extraordinary threat—rather, they were meant to prove that the tariffs do not ‘deal with’ the extraordinary threat they invoke. (20) The plaintiffs concede that the national emergency on the southern border due to cartel activity may be an “unusual and extraordinary threat”. However, since there is no clear thread between the implementation of tariffs and the ‘dealing with’ of this drug crime (rather, they argue, it only burdens the country in which the cartels originate), the trafficking Tariffs fail under the IEEPA. (21)

What comes next? 

Prior to Liberation Day, the largest tariff law enacted by the United States president was the Smoot-Hawley Tariff Act of 1930, attributed to a staggering rise in tariff rates from 40% in 1929 to 59.1% in 1932. (22) This increase led to a spike in unpopularity for Herbert Hoover, furthering the Democratic Party's win in 1933 and even resulting in Hoover being blamed for the start of the Great Depression. (23) In addition, the act caused an onslaught of foreign retaliatory measures, including reciprocal tariffs. (24) Knowing this, it is important to follow the actions of the Federal Court of Appeals as it navigates this monumental case, by either confirming a precedent or overturning one. If the Liberation Day tariffs are deemed unconstitutional, there are a number of responses the court could take, including halting enforcement and issuing refunds to importers who filed timely protests. Either way, the court’s reaction to the arguments presented above will have lasting consequences for the United States government—economically, politically, and in how we are perceived on a global stage.  

Endnotes

1. U.S. Customs and Border Protection. “Official CBP Statement–Liberation Day.” Announcement, April 8, 2025. U.S. Customs and Border Protection. https://www.cbp.gov/newsroom/announcements/official-cbp-statement-liberation-day?utm_source=chatgpt.com.

2. Executive Office of the President. Executive Order 14193: Imposing Duties to Address the Flow of Illicit Drugs across Our Northern Border, Federal Register 90, no. 25 (February 7, 2025): 9113–9116. https://www.federalregister.gov/documents/2025/02/07/2025-02406/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-northern-border.

3. Cerulla, Megan. “Tariffs could put them under, some small business owners say.” CBS News, May 5, 2025 https://www.cbsnews.com/news/tariff-small-businesses-future-jeopardy-price-hikes/.

4. United States Court of International Trade. V.O.S. Selections, Inc. et al. v. United States et al. Court No. 25-00066; The State of Oregon et al. v. United States et al., Court No. 25-00077. Slip Op. 25-66. May 28, 2025. https://www.cit.uscourts.gov/sites/cit/files/25-66.pdf.

5. State of Oregon et al. v. Donald J. Trump, United States Department of Homeland Security, et al. Complaint for Declaratory and Injunctive Relief. Filed in the United States Court of International Trade, May 7, 2025. https://ag.ny.gov/sites/default/files/court-filings/state-of-oregon-et-al-v-donald-j-trump-united-states-department-of-homeland-security-et-al-complaint-2025.pdf.

6. United States Court of Appeals for the Federal Circuit. V.O.S. Selections, Inc., et al. v. Donald J. Trump, et al. Nos. 2025-1812, 2025-1813. Order, May 29, 2025. https://www.cafc.uscourts.gov/opinions-orders/25-1812.ORDER.5-29-2025_2522636.pdf.

7. United States Court of International Trade. State of Oregon et al. v. United States et al. Court No. 25-00077. Order Granting Motion for Summary Judgment and Denying Plaintiffs’ Motion for Preliminary Injunction. Slip Op. 25-65. May 27, 2025. https://www.doj.state.or.us/wp-content/uploads/2025/05/IEEPA-Tariffs-0077-COURT-Order-Granting-MSJ-Denying-Pltfs-Mtn-for-PI-65.pdf.

8. Executive Office of the President. Executive Order 14197: Progress on the Situation at Our Northern Border. 90 Fed. Reg. 10822 (February 10, 2025). https://federalregister.gov/d/2025-02478.

9. United States Court of International Trade. State of Oregon et al. v. United States et al. Court No. 25-00077. Order Granting Motion for Summary Judgment and Denying Plaintiffs’ Motion for Preliminary Injunction. Slip Op. 25-65. May 27, 2025. https://www.doj.state.or.us/wp-content/uploads/2025/05/IEEPA-Tariffs-0077-COURT-Order-Granting-MSJ-Denying-Pltfs-Mtn-for-PI-65.pdf.

10. Legal Information Institute. “Nondelegation Doctrine.” LII Wex, Cornell Law School. Accessed June 2025. https://www.law.cornell.edu/wex/nondelegation_doctrine.

11.  Ibid. ; A. L. A. Schechter Poultry Corporation v. United States. Oyez. Accessed June 11, 2025. https://www.oyez.org/cases/1900-1940/295us495.

12. United States Court of International Trade. State of Oregon et al. v. United States et al. Court No. 25-00077. Order Granting Motion for Summary Judgment and Denying Plaintiffs’ Motion for Preliminary Injunction. Slip Op. 25-65. May 27, 2025. https://www.doj.state.or.us/wp-content/uploads/2025/05/IEEPA-Tariffs-0077-COURT-Order-Granting-MSJ-Denying-Pltfs-Mtn-for-PI-65.pdf.

13. United States Code. Title 50, § 1701 (2025) https://uscode.house.gov/view.xhtml?req=(title:50%20section:1701%20edition:prelim)%20OR%20(granuleid:USC-prelim-title50-section1701)&f=treesort&num=0&edition=prelim.

14. United States v. Yoshida International, Inc., 526 F.2d 560 (C.C.P.A. 1975), https://heinonline.org/HOL/CaseLawAuth?cid=7465993&native_id=7465993.

15. Tower, Samuel D. The International Emergency Economic Powers Act: Origins, Evolution, and Use. Congressional Research Service Report No. R45618. Updated March 20, 2019. https://www.congress.gov/crs-products/report/R45618. ; United States Court of International Trade. State of Oregon et al. v. United States et al. Court No. 25-00077. Order Granting Motion for Summary Judgment and Denying Plaintiffs’ Motion for Preliminary Injunction. Slip Op. 25-65. May 27, 2025. https://www.doj.state.or.us/wp-content/uploads/2025/05/IEEPA-Tariffs-0077-COURT-Order-Granting-MSJ-Denying-Pltfs-Mtn-for-PI-65.pdf. 

16. Ibid.

17. United States v. Yoshida International, Inc., 526 F.2d 560 (C.C.P.A. 1975), https://heinonline.org/HOL/CaseLawAuth?cid=7465993&native_id=7465993.

18. Congress.gov. Text – H.R. 7738 – 95th Congress (1977–1978): A Bill with Respect to the Powers of the President in Time of War or National Emergency. December 28, 1977. https://www.congress.gov/bill/95th-congress/house-bill/7738/text.

19. Tower, Samuel D. The International Emergency Economic Powers Act: Origins, Evolution, and Use. Congressional Research Service Report No. R45618. Updated March 20, 2019. https://www.congress.gov/crs-products/report/R45618.

20. United States Court of International Trade. State of Oregon et al. v. United States et al. Court No. 25-00077. Order Granting Motion for Summary Judgment and Denying Plaintiffs’ Motion for Preliminary Injunction. Slip Op. 25-65. May 27, 2025. https://www.doj.state.or.us/wp-content/uploads/2025/05/IEEPA-Tariffs-0077-COURT-Order-Granting-MSJ-Denying-Pltfs-Mtn-for-PI-65.pdf.

21. Ibid.

22. Romer, Christina D., and David H. Romer. What Ends Recessions?. NBER Working Paper No. 5509. Cambridge, MA: National Bureau of Economic Research, 1996. https://www.nber.org/system/files/working_papers/w5509/w5509.pdf.

23. U.S. Department of State. Smoot-Hawley Tariff Timeline. Archived March 12, 2009. https://web.archive.org/web/20090312055958/http://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html.

24. Mitchener, Kris James, Kevin Hjortshøj O'Rourke, and Kirsten Wandschneider. "The Smoot-Hawley Trade War." The Economic Journal 132, no. 647 (October 2022): 2500–2533. https://doi.org/10.1093/ej/ueac006.