An appeals court may soon get in the way of President Trump’s trade agenda as his Aug. 1 deadline approaches to impose so-called ‘reciprocal’ duties on a host of countries.
One day ahead of that deadline, the U.S. Court of Appeals for the Federal Circuit will convene across the street from the White House to decide whether the bulk of Trump’s tariffs are legal.
Hanging in the balance at Thursday’s oral argument is whether Trump can use an emergency law to justify his sweeping reciprocal tariffs on countries globally and a series of specific levies on Canada, China and Mexico.
The Constitution vests Congress with the power to impose tariffs, so Trump can’t act unless lawmakers delegated him authority.
Trump points to the International Emergency Economic Powers Act (IEEPA), a 1977 law that authorizes the president to impose necessary economic sanctions during an emergency to combat an “unusual and extraordinary threat.” Trump is the first president to attempt to leverage IEEPA to impose tariffs.
Citing an emergency over fentanyl, Trump invoked the law as early as February to target Canada, China and Mexico, its top trade partners.
By April, Trump moved more aggressively. This time citing an emergency over trade deficits, Trump declared “Liberation Day” and announced a 10 percent global baseline tariff with steeper levies for dozens of trading partners.
Trump delayed the latter portion, but he has threatened to institute heavy rates for countries that don’t negotiate a deal by Aug. 1.
In the lead-up to Friday’s deadline, Trump has announced a series of agreements.
On Sunday, he reached a deal with the European Union that will set tariffs at 15 percent. The president reached a similar deal with Japan last week and another one with the Philippines.
In court, the administration has pointed to its dealmaking, warning that any judicial intervention undermines the president’s ability to negotiate. The Justice Department also asserts there is no basis for the courts to review Trump’s emergency declarations.
“It is not difficult to imagine that Congress meant for the President to use his IEEPA powers as a tool to create leverage, just as Congress and the President have long done in other international-trade contexts,” the Justice Department wrote in court filings.
The case arrived at the Federal Circuit after the U.S. Court of International Trade in late May invalidated the challenged tariffs by ruling that IEEPA does not “confer such unbounded authority.”
The 12 Democratic-led states and five small businesses suing go further, contending that IEEPA does not authorize tariffs in any circumstance. They say the law instead concerns measures like sanctions and embargoes.
“No statute contains the sweeping delegation of authority the government claims,” the businesses wrote in court filings. “Nor could a statute grant such unbounded tariff authority without violating the separation-of-powers principles on which our Constitution is based.”
The Federal Circuit put the lower ruling on hold until the appeal is resolved. The court has agreed to expedite the case, meaning a decision could come soon after the arguments.
One other potential wrinkle to watch Thursday: The Trump administration argues the Supreme Court’s recent decision clawing back universal injunctions means the tariffs shouldn’t be blocked nationwide, even if they are declared illegal.
If you want to listen in, audio of Thursday’s argument will be livestreamed here.
The appeals court will hear from three attorneys.
Brett Shumate, assistant attorney general in the Justice Department’s civil division, will represent the administration.
Neal Katyal, who served as solicitor general in the Obama administration and one of the most well-known Supreme Court advocates, will argue on behalf of the businesses.
And Benjamin Gutman, Oregon’s solicitor general, will represent the states.
The trio will appear before 11 of the Federal Circuit’s 12 active judges.
Judge Pauline Newman, 98, the nation’s oldest active federal judge, will not participate.
Her fellow judges in 2023 suspended her from hearing new cases over concerns about her mental fitness. Newman is suing her colleagues, and the judges on Monday asked to extend her suspension another year over a refusal to undergo full neuropsychological testing.
Thursday’s argument is arguably the most prominent challenge to Trump’s tariffs, but it is far from the only one. The tariffs have come under roughly a dozen lawsuits in total.
A case filed by another group of small businesses is headed to the U.S. Court of Appeals for the D.C. Circuit for oral arguments on Sept. 30. Those plaintiffs are meanwhile asking the Supreme Court to leapfrog the process and take up the dispute now.
On Monday, the lower trade court refused automotive parts manufacturer Detroit Axle’s request to separately block Trump from rescinding a tariff exception for low-cost goods from China.
Many of the other cases are frozen, all waiting for the Federal Circuit to act.
Welcome to The Gavel, The Hill’s weekly courts newsletter from Ella Lee and Zach Schonfeld. Click above to email us tips, or reach out to us on X (@ByEllaLee, @ZachASchonfeld) or Signal (elee.03, zachschonfeld.48).
Criminal defendant challenges Habba’s appointment
A criminal defendant is going after Alina Habba’s workaround that allows her to remain New Jersey’s top federal prosecutor.
Staring down drug charges, defendant Julien Giraud Jr. says his indictment must be dismissed because Habba has no legal authority to proceed.
“Giraud Jr. has a constitutional right to be prosecuted only by a duly authorized United States Attorney,” Thomas Mirigliano, Giraud’s attorney, wrote in court filings.
“The illegitimacy of Ms. Habba’s appointment undermines Giraud Jr.’s fundamental due process rights – as well as the due process rights of all similarly situated defendants – necessitating dismissal or immediate injunctive relief,” Mirigliano continued.
Earlier this year, Trump named Habba, his former personal defense lawyer and White House counselor, to serve as New Jersey’s interim U.S. attorney. Federal law provides that such interim appointments can only last 120 days unless the relevant court signs off on an extension.
When Habba’s clock ran out last week with still no Senate confirmation, the bench of federal judges in New Jersey refused to extend her tenure. Instead, they tapped Desiree Grace to take the helm.
The Trump administration is now attempting a workaround.
Trump withdrew Habba’s nomination to take the role permanently, and she was instead made the office’s No. 2 official, which doesn’t require Senate confirmation. The Justice Department also fired Grace, enabling Habba to be elevated the role of acting U.S. attorney.
Saurabh Sharma, an official in the White House’s presidential personnel office, instructed Grace in a Saturday email that “you may not lawfully serve as the United States Attorney for the District of New Jersey,” court records show.
But the criminal defendant is taking up the argument, contending the switch-up isn’t legal.
Giraud points to the Federal Vacancies Reform Act (FVRA), which lays out rules for filling senior executive branch vacancies.
The FVRA prevents someone from being elevated to an acting role if the president “submits a nomination of such person to the Senate for appointment to such office” and they weren’t in the No. 2 spot for at least 90 days.
Giraud contends withdrawing Habba’s nomination doesn’t restore her eligibility, but the administration disagrees.
“A lifetime ban of that sort would have no logical relationship to the distinct separation-of-powers problem that Congress sought to address,” the Justice Department wrote in court filings.
U.S. District Judge Edward Kiel, an appointee of former President Biden who had overseen Giraud’s case, won’t decide the matter, presumably because Kiel serves on the bench that refused to extend Habba’s tenure.
Instead, U.S. District Judge Matthew Brann, an appointee of former President Obama who serves in neighboring Pennsylvania, will handle the matter.
Brann held a conference with the parties Tuesday afternoon. Without explanation, Brann conducted the proceeding under seal.
Was a judge busted for using AI?
Are we hallucinating — or did AI?
A federal judge in New Jersey withdrew a ruling in a biopharma securities case after lawyers flagged that the opinion was littered with fake quotes and other errors.
The mistakes were brought to U.S. District Judge Julien Neals’s attention last week by Wilkie Farr & Gallagher lawyers representing a biopharmaceutical company, who noted a “series of errors” in the June 30 opinion. Neals is a Biden appointee.
The errors included three instances where the outcomes of cases cited in the decision were misstated and “numerous instances” where made-up quotes were falsely attributed to decisions.
Neals wrote in a minute order that his opinion and order denying the company’s request to dismiss a shareholders lawsuit were “entered in error.” He directed the court clerk to remove it and promised a subsequent ruling would follow.
Now, let’s be clear: Neither the lawyers nor the judge have said that artificial intelligence was to blame. However, the mistakes closely mirror the AI “hallucinations” that have embarrassed lawyers in other cases.
Earlier this month, lawyers for MyPillow CEO Mike Lindell in a Denver defamation case were fined $3,000 each for submitting an inaccurate brief to the court that was generated by AI.
The judge noted some 30 defective citations in the February brief but didn’t extend her sanctions to Lindell, since the lawyers did not inform him they were using AI tools in his case.
Last year, ex-Trump fixer Michael Cohen and his lawyer narrowly avoided sanctions for a submission that included fraudulent case citations cooked up by AI, though the judge chided them for the “embarrassing and certainly negligent” episode.
Those examples are two of some 140 AI hallucinations in U.S. court cases since 2023, when French lawyer and data scientist Damien Charlotin began tracking the incidents. And even those are just the hallucinations we know about.
A 2024 Stanford study found that generative AI models produce hallucinations regarding legal information between 69 percent to 88 percent of the time.
“I suppose this particular case is settled, but I would wager there are more orders on Judge Neals’ dockets that have hallucinations,” constitutional law professor Josh Blackman wrote in Reason’s “The Volokh Conspiracy.”
“Indeed, I suspect there are many judges throughout the country that have issued opinions with hallucinations,” he said.
Trump Org seeks crackdown on Trump merch sellers
The Trump Organization is taking action against online stores it says are illegally selling Trump-branded merchandise.
Trump and his companies own four registered trademarks of the “TRUMP” name, which cover its use on campaign buttons, apparel, banners, bumper stickers, decorative car decals, glasses and more.
The suit claims the sellers have illegally used the protected marks in selling products on sites like AliExpress, Amazon, DHgate, eBay, and Walmart.
“Plaintiffs have not licensed or authorized Defendants to use the TRUMP Trademarks, and none of the Defendants is an authorized retailer of the genuine TRUMP Products,” the Trump Organization wrote in its lawsuit.
The company is represented by the law firm Boies Schiller Flexner.
The lawsuit does not publicly name the sellers and instead asks to keep them under seal.
But the complaint contains images of several of the allegedly counterfeit products, including Trump-branded hats, hoodies, shirts and mugs.
“In addition, the Counterfeit Products for sale in the Defendant Internet Stores bear similarities and indicia of being related to one another, suggesting that the Counterfeit Products were manufactured by and come from a common source,” the lawsuit states.
The case was assigned to U.S. District Judge Thomas Barber, a Trump appointee who serves in Tampa.
Sidebar
5 top docket updates
- Santos reports to prison: Former Rep. George Santos (R-N.Y.) began his 87-month prison sentence Friday after pleading guilty to wire fraud and aggravated identity theft.
- Planned Parenthood protected: A federal judge expanded her injunction blocking a provision of the ‘one, big beautiful’ bill. It now protects all Planned Parenthood affiliates from Medicaid funding cuts. Democratic-led states sued over the same provision Tuesday.
- Trump wants Murdoch deposed: Trump is seeking an expedited deposition of Rupert Murdoch in the president’s lawsuit against The Wall Street Journal, citing the media mogul’s old age and health issues.
- Paxton takes action: Texas Attorney General Ken Paxton (R) is taking legal action against a New York county clerk for rejecting Texas’s attempt to enforce a judgment against a doctor who allegedly mailed abortion medication to a Texas woman.
- Another emergency at SCOTUS: The Trump administration asked the Supreme Court to permit the cancelling of National Institutes of Health grants over their connections to diversity initiatives. It’s the administration’s 21st emergency appeal since taking office.
In other news
- RIP Layla: A Washington state woman accused the United States Navy’s Blue Angels air show of terrorizing her elderly cat, Layla, and blocking her on social media when she used the platform to criticize the flight demonstration squadron. The complaint includes a photo of the late cat “in her summertime prime.”
- High court, low tide: A law professor at the University of Texas at Austin shared on social media that the school has hung artwork depicting Supreme Court justices and other figures adjacent to the court soaking up the sun at Rehoboth Beach. You have to see it for yourself.
- Big Cheese busted: The Tallahassee Police Department on Thursday arrested a Chuck E. Cheese employee for credit card fraud. He was taken out in handcuffs, wearing the mouse costume.
On the Docket
Don’t be surprised if additional hearings are scheduled throughout the week. But here’s what we’re watching for now:
Today:
- The U.S. Court of Appeals for the 1st Circuit will hold arguments on fair housing groups’ request to block the Trump administration’s freezing of 78 Fair Housing Initiative Program (FHIP) grants.
- A federal judge in Florida will hold a hearing on whether their court is the proper venue to consider a lawsuit aiming to stop the construction of “Alligator Alcatraz.”
- A federal judge in South Carolina will hold a hearing to mull blocking the state’s law that resulted in the cancellation of the AP African American Studies course in the state.
Thursday:
- The U.S. Court of Appeals for the Federal Circuit will hear oral arguments in the Trump administration’s appeal of an order blocking the bulk of Trump’s tariffs.
- Speak Up for Justice is set to hold a virtual event called “Judges Break Their Silence: Attacks, Intimidation, and Threats to Democracy.” Four sitting judges, including two who have handled major cases involving the Trump administration, are expected to participate.
Friday:
- The U.S. Court of Appeals for the 1st Circuit will hear oral arguments in the administration’s appeal of an order blocking Trump’s birthright citizenship executive order.
- A federal judge in Maryland is set to hold the second leg of a preliminary injunction hearing in a challenge to the Trump administration’s cancellation of hundreds of National Institutes of Health grants dedicated to LGBTQ health.
- A federal judge in California is set to hold a motions hearing in a challenge to the administration’s decision to end temporary protected status (TPS) for Venezuelans and Haitians.
Monday:
- A federal judge in Oregon is set to hold a preliminary injunction hearing in a challenge to the Department of Government Efficiency’s (DOGE) gutting of the National Endowment for the Humanities.
- A federal judge in Maryland is set to hold a summary judgment hearing in a challenge to DOGE’s termination of Regional Educational Laboratories (RELs) contracts and grants.
Tuesday:
- A federal judge in Washington, D.C., is set to hold a preliminary injunction hearing in a challenge to the Environmental Protection Agency’s elimination of the Environmental and Climate Justice Block Grant, which is appropriated under the Inflation Reduction Act.
- A federal judge in Hawaii is set to hold a summary judgment hearing in a challenge to Trump’s proclamation stripping protections from the Pacific Islands Heritage Marine National Monument and opening it to commercial fishing.
What we’re reading
- Forbes’s Giacomo Tognini and John Hyatt: How Jeffrey Epstein Got So Rich
- Bloomberg’s Zoe Tillman: Trump Agenda Stuck in Legal Wrangling Despite Supreme Court Wins
- Politico Pro’s Leslie Clark: SEC says legal challenges against climate rule should continue
- TIME’s Brian Bennett: Inside the Preparations for Trump’s Next Supreme Court Nominee
- Keith E. Whittington in Reason’s “The Volokh Conspiracy”: Diversity Statements and the First Amendment
