President Trump’s decision to link tariff rates to Brazil’s prosecution of former President Jair Bolsonaro is testing the bounds of White House tariff powers and could complicate the president’s defense against a high-stakes legal case over his sweeping levies.
Lawyers representing five import-heavy businesses sued Mr. Trump in the spring, saying he overstepped his executive powers by arguing that trade deficits are so damaging that he must impose tariffs under the International Emergency Economic Powers Act of 1977.
The plaintiffs say Mr. Trump is bolstering their case by tethering tariff decisions to non-trade matters.
“It’s just sort of another example of the fact that the president thinks he has unlimited tariff power and can do whatever he wants. The president thinks he can impose tariffs for any reason,” said Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center. “When he changes his mind on what the justification is for the tariffs, it undermines the government’s own argument.”
The president and his team point to trade deficits as national emergencies and the prime motivation behind nation-by-nation tariffs, saying too many countries tap into the rich American market without accepting U.S. goods into their markets.
Yet Mr. Trump is going beyond deficits, pointing directly to Mr. Bolsonaro’s prosecution in proposing a 50% tariff on Brazilian goods.
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“The way that Brazil has treated former President Bolsonaro, a Highly Respected Leader throughout the World during his Term, including by the United States, is an international disgrace,” Mr. Trump wrote to Brazilian President Luiz Inacio Lula da Silva, referring to a case that involves Mr. Bolsonaro’s actions after his 2022 election loss.
Mr. Trump also declared an emergency over fentanyl to justify 35% tariffs on Canada and 30% levies on Mexico, effective in August.
The Liberty Justice Center filed a lawsuit in April against Mr. Trump’s “Liberation Day” tariffs on dozens of trading partners, saying the president is tapping into authority that rests solely with Congress. Attorneys also said the levies would harm U.S. companies that rely on imports.
The U.S. Court of International Trade ruled in favor of the justice center and Democratic-led states in May, but the administration appealed and was granted a stay, meaning Mr. Trump could proceed with his tariff moves.
Mr. Trump paused the tariffs for 90 days to allow space for trade talks but reassigned tariffs this month in nation-by-nation letters, including to Brazil, Canada and Mexico.
He is proceeding at a brisk pace. Since July 7, he has sent letters to more than 20 countries, assigning them tariff rates, effective Aug. 1.
The U.S. Court of Appeals for the Federal Circuit consolidated the justice center’s lawsuit with a similar lawsuit from a dozen Democratic-run states. The court scheduled oral arguments in the tariff case for July 31.
The administration has until Friday to respond to a recent brief filed by the Liberty Justice Center.
The IEEPA law that Mr. Trump relies on empowers the president to regulate international commerce in response to unusual or extraordinary foreign threats. For instance, President George W. Bush used IEEPA to block assets of terror groups after the terrorist attacks on Sept. 11, 2001.
The plaintiffs argue that Mr. Trump is fabricating emergencies to swipe tariff-setting authority from Congress. They filed their brief shortly before Mr. Trump tied Brazil’s tariffs to Mr. Bolsonaro’s legal strife, though the plaintiffs think the situation bolsters their case.
“It definitely undermines their argument,” Mr. Schwab said of Mr. Trump’s decision to go beyond trade deficits in justifying tariffs. “It also underlines a problem for our clients — that the president can change his mind and change the tariffs on a whim, that makes the uncertainty very high.”
A White House official said the administration has acted deliberately to follow the law, declaring separate emergencies over trade deficits and drug trafficking to cover the discreet tranches of tariffs related to reciprocal trade treatment and the fentanyl crisis.
It will elaborate on its defense in the formal brief to the appellate court.
Dozens of Democrats filed a friend-of-the-court brief in the tariff lawsuit, saying Congress must act before Mr. Trump tries to impose tariffs.
“This isn’t a close call — IEEPA doesn’t give the president ANY tariff authority, let alone the power to slap sweeping tariffs on products from almost every country on earth,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.
Tariffs are taxes or duties paid by importers on the goods they bring in from foreign markets.
Mr. Trump says his tariffs will force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.
Mr. Trump’s affection for the levies seems to be lifelong, and he speaks favorably about former President McKinley, known as the “tariff king.”
“The president is on record with comments that suggest that a tariff could conceivably replace the income tax,” said Ross Baker, a politics professor at Rutgers University in New Jersey. “For a president known for grazing in many policy areas, the tariff is the pasture to which he always returns.”
Wall Street reacted negatively to Mr. Trump’s latest tariff threats, though stocks stabilized Monday as investors bet on tariff levels being slashed before August.
European Trade Commissioner Maros Sefcovic, addressing reporters in Brussels, said the European Union “regrets” Mr. Trump’s threat to impose 30% tariffs on EU goods. He thought negotiators had been making progress toward a trade deal with the U.S.
“We remain convinced that our trans-Atlantic relationship deserves a negotiated solution, one that builds the basis for a new stability and cooperation, and that is why we continue to engage with the United States administration,” he said.
Mr. Sefcovic said the EU will continue to work toward a pact before the Aug. 1 deadline because a 30% or 30%-plus tariff would effectively cut off transactions.
Mr. Trump sometimes characterizes the tariffs as payments from other countries or the cost of doing business in the rich American consumer market, but countries don’t pay the tariffs directly to the U.S. Treasury.
In many cases, U.S. companies will pay the levies, and they might pass on at least some of the cost to consumers through higher prices.
Mr. Schwab said the plaintiff companies pay the tariffs to U.S. customs whenever they have to import goods.
“And they have to pay right away,” he said. “The cost is up front, and then they don’t make that up unless they can sell at a profit.”
The justice center’s plaintiffs are: VOS Selections, a New York business that specializes in the importation and distribution of small-production wines, spirits and sake; FishUSA Inc., which sources most of its sportfishing tackle from abroad; Genova Pipe, a Utah business that makes ABS pipe using ABS resin from South Korea and Taiwan; MicroKits LLC, a Virginia business that assembles Asian electronics into educational electronic kits and musical instruments; and Terry Precision Cycling of Vermont, which makes women’s cycling apparel.
The circuit court consolidated their case with a broad challenge against Mr. Trump’s tariffs from a dozen states: Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont.
