Updated: A federal appeals court has ruled in support of a wine importer's lawsuit challenging many of the Trump administration's tariffs on foreign goods, finding the President exceeded his authority under the law. But the tariffs will remain in place while the White House appeals to the U.S. Supreme Court.
In a 7-4 decision, the U.S. Court of Appeals for the Federal Circuit rejected Trump's authority to carry out most of his tariffs, agreeing with the lower court that Trump's actions were "invalid as contrary to law."
The President made it clear he plans to appeal, posting on social media that the court order blocking the tariffs "would literally destroy the United States of America." He called on the Supreme Court to affirm he has the power to impose tariffs unilaterally, without congressional approval. "Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again," said Trump.
On Sept. 9, the Supreme Court announced it has agreed to hear the tariffs case—Trump v. V.O.S. Selections—as well as a related case on an expedited basis. Oral arguments will be heard in early November.
What Qualifies as an Emergency?
The first decision in the case came when a federal court ruled May 28 that President Trump had overstepped his authority when he imposed sweeping tariffs of 10 percent on nearly every nation in the world, potentially raising the price of every imported bottle of wine in American stores and restaurants. Since the suit was first filed, the White House has increased the tariff rates for many nations, including 15 percent for most European Union goods and 30 percent for all South African goods.
A three-judge panel at the U.S. Court of International Trade, a federal court in Manhattan, halted Trump’s global tariffs that he imposed by citing emergency economic powers. These include the “Liberation Day” tariffs he announced on April 2 and tariffs placed earlier this year against China, Mexico and Canada, designed to combat fentanyl coming into the United States.
A small New York based wine importer—VOS Selections—is the plaintiff. “This is a win for my small business along with small businesses across America—and the world for that matter,” said VOS founder Victor Schwartz, in a statement. “We firmly believe in our lawsuit and will see it all the way through to the United States Supreme Court.”
VOS and four other small businesses, all represented by the Liberty Justice Center, challenged the White House’s use of the International Emergency Economic Powers Act (IEEPA) to impose the tariffs. The 1977 law gives the President broad powers to regulate financial transactions upon declaring a national emergency but does not explicitly mention tariffs. No president has used IEEPA to enact them. The suit also argues that the White House failed to prove that the nation faced an emergency. Trump has argued that persistent trade deficits with other nations qualifies as an emergency.
Normally, Congress can enact tariffs or the Executive Branch can impose targeted tariffs after an investigation. During his first term, Trump imposed several tariffs, including 25 percent tariffs on Spanish, French and German wines, after investigations by the U.S. Trade Representative.
“IEEPA does not authorize any of the worldwide, retaliatory or trafficking tariff orders,” the panel of judges said in their order on May 28. “The worldwide and retaliatory tariff orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.”
The Trump Administration made it clear it has no intention to change course without a fight. “It is not for unelected judges to decide how to properly address a national emergency,” White House spokesperson Kush Desai said in a statement. “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American greatness.”
The appellate court has put the decision on hold while an appeal is prepared. If the decision is upheld, it would not only end the tariffs, but businesses that paid them could receive refunds.
Uncertainty Is The Only Certainty
Schwartz founded VOS Selections in 1987 and operates it today with his daughter Chloe Schwartz. They import and distribute a wide range of wines from small producers in France, Italy, Spain and elsewhere. Like many small importers, Schwartz grappled with tariffs during the first Trump Administration but says the latest round are simply too painful for small businesses like his to handle.
With the ruling on hold, the uncertainty continues for many wine importers. Since January, they have been unsure how high the tariffs will be and how long they will endure.
Check out all of Wine Spectator's past coverage of trade wars, wine tariffs and how they impact consumers.
