President Donald Trump’s planned tariffs on neighboring Canada and Mexico rely on a novel interpretation of federal law that is prompting questions about whether his strategy could survive legal challenge.
Legal experts say the 1977 law Trump is using to implement the tariffs — the International Emergency Economic Powers Act, or IEEPA — gives the president broad economic authority, but has never been used to impose tariffs on foreign goods.
For now, Trump’s plans to impose a 25 percent tariff on the nation’s northern and southern neighbors is on ice, but the threat of a North American trade war — and massive impact for U.S. energy infrastructure — still looms.
If Trump relies on the IEEPA to advance his plans, he may stumble in the courts, as it is “far from clear” that Congress gave the president power to issue tariffs under the statute, said Julian Ku, faculty director of international programs at Hofstra University School of Law.
Its original intent was to block trade and transactions with other countries — not impose taxes while allowing trade to continue.
“That’s why it doesn’t fit in an obvious way with what IEEPA has typically been used for,” Ku said.
Other legal challenges to the IEEPA, while not focused on tariffs, have found that the law is not an overly broad delegation of authority to the president, said Jennifer Hillman, co-director of the Institute of International Economic Law at the Georgetown University Law Center.
Some observers said recent Supreme Court rulings might also throw a wrench in the president’s plans, if tariffs are eventually challenged in federal court.
“Courts have generally given great deference to the President’s emergency powers,” said David Goldwyn, chair of the Energy Advisory Group at the Atlantic Council, in an email.
But the Supreme Court’s ruling last year striking down Chevron deference could change that, Goldwyn said. Under the legal doctrine, courts generally deferred to agencies’ interpretations of ambiguous laws. Last summer, the Supreme Court ruled in Loper Bright v. Raimondo that courts should rely instead on the “best” reading of the statute.
The IEEPA does not “specifically name tariffs, and it is possible that it could be challenged on that basis,” said Goldwyn.
Thomas Berry, director of the Cato Institute’s Robert A. Levy Center for Constitutional Studies, said the major questions doctrine could also prove problematic for the president.
The legal doctrine states that Congress must clearly delegate power on issues of major economic or political significance. The Supreme Court cited the doctrine for the first time in its 2022 ruling in West Virginia v. EPA that invalidated Obama-era regulations on greenhouse gas emissions from power plants.
When courts review a statute, they are looking to see if the executive branch has ever asserted this power before, and judges will take a close look in cases where a decades-old law is being used as part of a new exercise of power, said Berry.
The courts are looking out for whether the executive branch is trying to “find a statute to shoehorn that policy goal into,” said Berry. “I think there’s a lot of evidence that that is what happened here.”
Not all courts agree that the major questions doctrine applies to actions by the president. The 5th U.S. Circuit Court of Appeals in Louisiana has taken the view that it does, and the 9th U.S. Circuit Court of Appeals in California has said that it doesn’t, said Berry.
“In my view, the major questions doctrine is a way to interpret whether the executive branch as a whole has been given a certain authority by a statute,” said Berry. “That question is relevant whether the particular official given the authority happens to be the president … or an agency.”
What qualifies as an ’emergency’?
Under the IEEPA, the president has power to impose economic restrictions based on a declaration of a national emergency where there is an “unusual and extraordinary threat” to the national security, foreign policy or economy of the United States.
Unlike other laws authorizing tariffs, which require time to implement, the IEEPA allows for quick action by a president citing emergency powers. Congress does not precisely define what counts as an emergency under the statute.
In this case, Trump is relying on the threat of illegal immigration and illegal transport of fentanyl across the U.S. border to justify plans to impose a 25 percent tariff on goods from Canada and Mexico, as well as a 10 percent tariff on Canadian energy resources.
The countries reached a temporary deal earlier this week to delay the tariffs for 30 days. A separate 10 percent tariff on goods from China, however, has already gone into effect.
Trump will need to stick to the argument that the tariffs are about illegal immigration and drug smuggling in order to have the best chance of defending them in court, Ku said. Attorneys for the president will need to avoid talking about the amount of trade between the countries.
While the IEEPA has been challenged before, those claims typically do not succeed because courts have generally been deferential to the president’s authority over issues of national security and foreign affairs, he said.
Ku anticipated that legal challenges brought by companies paying the tariffs at ports of entry could crop up in any federal court across the country, unlike typical trade disputes, which would land before the Court of International Trade in New York.
Energy impacts
The combined effects of the tariffs on Canada, Mexico and China could be felt broadly by the energy industry.
The United States imports many of its transformers for electrical transmission from Mexico. With a global shortage of transformers, increasing their costs by 25 percent could have major impacts for various projects, said Joseph Webster, a senior fellow at the Atlantic Council.
He added that China and Canada also supply a significant portion of U.S. transformer imports.
Late last year, Canada became the second-largest exporter of battery energy storage systems to the United States, after China, said Webster, citing U.S. Census Bureau data.
About 60 percent of the U.S.’s crude oil imports come from Canada, and 11 percent come from Mexico.
Even if all of the tariffs against Mexico and Canada do not end up being implemented, they have already taken effect for Chinese goods, so the issue is still a live controversy, said Berry.
The ability to implement these tariffs under the IEEPA is “a serious power to be placed in the hands of the president,” he said.
“It would be good for the separation of powers and good for international relations if we had clarity — one way or the other — on the scope of [the president’s] powers,” Berry said.
