Analysis: The CIT’s Zero-Duty Order and the CASA Problem

Earlier today, the Court of International Trade ordered Customs and Border Protection to liquidate all as-yet unliquidated entries subject to the IEEPA tariffs at zero duties — for all importers, not just the plaintiffs before it.

The order is aggressive, and there is a significant chance the administration will obtain a stay from the Federal Circuit — or, if necessary, the Supreme Court — in the coming days.

The order raises two issues.

The first is whether the court can order that relief at all, because it bypasses the normal protest process. Under the customs statutes, importers ordinarily must challenge duties through the protest process. By ordering liquidation at zero for all unliquidated entries, the court effectively bypasses that framework.

The second — and the issue the administration will likely seek to stay immediately — is whether the court can grant relief for all importers, rather than limiting relief to the plaintiffs before it.

The Court of International Trade judge acknowledged the Supreme Court’s recent decision limiting nationwide injunctions, writing:

“In Trump v. CASA, Inc., the Supreme Court held ‘that universal injunctions are impermissible.’ … That holding, however, does not apply to the orders that will be issued in this case.”

That is a striking statement.

The opinion attempts to distinguish the Court of International Trade from other federal courts on the policy ground that the trade court has exclusive jurisdiction over customs disputes, and therefore there is no risk of conflicting rulings across different courts.

Whatever the merits of that policy argument, the Court of International Trade — like all federal courts — possesses only the powers granted by statute. And the opinion does not cite or address the statute that defines those powers:

“The Court of International Trade shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States.”

— 28 U.S.C. § 1585

In CASA, the Supreme Court held that district courts lack authority to issue equitable relief extending beyond the parties before them. Section 1585 provides that the Court of International Trade possesses the same powers as a district court — and no more. It is therefore difficult to see how the order can be reconciled with CASA.

The Federal Circuit — and especially the Supreme Court, which has shown strong interest in enforcing limits on nationwide injunctions and ensuring that lower courts follow its decisions — may therefore be receptive to the administration’s request for a stay.

The coming days will be significant. If the appellate courts stay the order, importers will need to rely on the protest process and Court of International Trade litigation to preserve refund rights — making it all the more important to act before applicable deadlines expire.

— Matthew A. Seligman, Principal, Grayhawk Law