Unlawful Tariffs
A federal court ruled Thursday that President Trump's 10% tariff on imports is unlawful, marking another legal setback for his trade policies. The Court of International Trade concluded that the Trump administration misread the law used to justify the tariffs. The ruling is a 2-1 decision.
Legal Challenges
The Department of Justice filed a notice of appeal on Friday, signaling plans to challenge the ruling. The United States Court of Appeals for the Federal Circuit in Washington, D.C., handles appeals from the Court of International Trade. Tim Brightbill, co-chair of the law firm Wiley Rein's international trade practice, said this decision will surely be appealed by the administration.
Section 122 of the Trade Act
Trump turned to Section 122 of the Trade Act of 1974, imposing a 10% across-the-board surcharge set to expire July 24. The trade statute allows the president to impose a temporary tariff of as much as 15% for up to 150 days to address "large and serious" balance-of-payments deficits.
Definition of "Balance-of-Payments Deficits"
The dispute boiled down to the definition of the phrase "balance-of-payments deficits." The Court of International Trade rejected the Trump administration's argument that the term "balance-of-payments deficits" in Section 122 of the Trade Act of 1974 is the same as a "trade deficit." The majority wrote, "It is clear that Congress was aware of the differences in the words it chose." The judges acknowledged that the term "causes some confusion," but concluded that the Trump administration's interpretation was incorrect.
Impact on Businesses
The court ruled the tariffs illegal and entered a permanent injunction, though only for the plaintiffs in the case. The small businesses that brought the suit, a spice company and a toy retailer, are represented by the Liberty Justice Center. The immediate impact of Thursday's ruling is unclear. The court granted an injunction for two small businesses and the state of Washington. The judges dismissed the claims brought by the larger group of states because they lacked standing.
White House Response
White House spokesperson Kush Desai said, "President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis." Desai added that "The Trump administration is reviewing legal options and maintains confidence in ultimately prevailing."
Future of Tariffs
The tariffs in question are set to expire in late July, and it is unclear if the court will hear the case in time to meaningfully rule on the issue. The administration has signaled that replacement tariffs will likely be enacted before then.
