The Court of International Trade dealt the Trump administration another trade policy blow Thursday, ruling that a 10% global tariff applied to most U.S. imports is illegal.
The case is an amalgamation of legal challenges brought by two small businesses – Burlap & Barrel, a New York-based spice vendor, and Basic Fun!, a Florida-based toy company – and a group of 24 Democratic states' attorneys general.
Despite determining that Trump wielded his tariff authority illegally, the judges granted relief only to Washington state and the companies, meaning that other companies will likely have to file their own lawsuits.
The judges agreed that continued collection of the duties would cause potentially irreparable harm to the companies and the state, the "importer plaintiffs." granting them summary judgment and entering a permanent injunction.
Tthe panel of judges ruled that the other states lacked standing in the case because they did not pay any tariffs directly.
"Of note, the decision’s practical impact is narrow since the court did not issue a universal injunction applying to all impacted imports," Ryan Majerus, an attorney at King & Spalding, told Agri-Pulse in an email. "The administration will appeal and I think the Federal Circuit [Court of Appeals] will be the final say on the issue rather than the Supreme Court.”
The administration notified the court on Friday that it would appeal to the Court of Appeals for the Federal Circuit. White House Spokesperson Kush Desai said in an email to Agri-Pulse that the administration "maintains confidence in ultimately prevailing."
"President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis," Desai added.
President Donald Trump unveiled the tariff just hours after the Supreme Court struck down the levies he had imposed under the International Emergency Economic Powers Act in February. The 10% duty, which Trump threatened to hike to 15%, relied on Section 122 of the of the Trade Act of 1974, which allows the president to take action to address a balance-of-payments crisis for up to 150 days.
It’s easy to be “in the know” about what’s happening in Washington, D.C. Sign up for a FREE month of Agri-Pulse news! Simply click here
Unless Congress intervenes, the duties will expire in the summer, by which time the administration is hoping to have other tariffs in place.
“Rather than identifying ‘balance-of-payments deficits’ as that term was intended in 1974,” the president’s order “relies upon current account deficits, and a discussion of ‘a large and serious trade deficit,’” Judges Mark Bennett and Claire Kelly wrote in their opinion. Accordingly, they found, “the tariffs imposed on plaintiffs are unauthorized by law.”
One judge of the three-judge panel, Timothy Stanceu, offered a dissenting opinion. He argued that the statute, “in specific circumstances,” allows the president the authority to amend tariffs based on “his own findings as to the specific economic conditions in the United States.”
The Liberty Justice Center, the non-profit law firm which represented the small businesses in the case, rejected that interpretation.
“Because the Constitution vests tariff authority in Congress, the President may only issue tariffs where Congress explicitly delegates that power. Section 122 does not allow the President to impose tariffs for any reason he wants,” the group wrote in a statement following the ruling.
“Section 122 was passed in response to a specific historical crisis that resulted in the United States’ currency and gold reserves being depleted. Congress authorized the President to impose tariffs where the United States experienced fundamental international payments problems and needed to respond to large and serious balance-of-payments deficits,” Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center, said in the statement. “That is not the situation here. The United States has a trade deficit, not a balance-of-payments deficit, and does not have international payments problems. The President cannot impose these tariffs under Section 122.”
In a call to reporters after the decision, Schwab said that he would expect other companies to begin filing their own cases contesting the Section 122 duties to ensure they are entitled to any refunds that they may be entitled to.
"People want to be prepared," Schwab said.
For more news, go to Agri-Pulse.com.
