DOJ Warns of Economic Risks if 1977 IEEPA Tariffs Overturned

The U.S. Department of Justice (DOJ) has issued a warning regarding the potential economic impact if tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA) are overturned. The DOJ cautions that invalidating these tariffs could trigger a severe economic crisis akin to the Great Depression of 1929, threatening jobs, savings, and crucial social welfare programs such as Social Security and Medicare.

This warning was submitted in a legal brief to the U.S. Court of Appeals for the Federal Circuit, which is reviewing a previous ruling by the Court of International Trade (CIT) that found President Trump's imposition of these tariffs exceeded his executive authority. The tariffs in question were instituted under the IEEPA, a federal statute allowing the president to regulate commerce during national emergencies, with justification citing trade deficits and fentanyl smuggling concerns. The CIT's ruling, which temporarily invalidated the tariffs, has been appealed by the White House and is currently stayed by the appellate court pending a final decision. Legal arguments emphasize that overturning the tariffs could undermine international trade agreements secured by the administration, involving private-sector investments valued in the trillions.

However, economic experts contest the DOJ's claims, noting that Social Security and Medicare funding is derived from payroll taxes, not tariff revenue, and warning that high tariffs historically pose greater economic risks. Scholars highlight that lifting tariffs would more likely reduce costs for U.S. consumers and producers and caution that the administration's economic projections lack a factual basis. Alternative tariff authorities exist but are viewed as less effective. The appellate court's decision holds significant implications for U.S. trade policy and may advance to the Supreme Court. This case underscores the intersection of trade regulation, executive authority, and economic stability in the U.S. market.