The US Court of International Trade ruled that the 10 percent global tariff imposed by president Donald Trump under Section 122 of the Trade Act of 1974 is illegal, marking the second judicial defeat this year for the administration's tariff regime.
Trump invoked Section 122, a never-before-used provision allowing temporary import surcharges of up to 15 percent for 150 days to address balance-of-payments deficits, back in February after the Supreme Court struck down his earlier sweeping tariffs imposed under the International Emergency Economic Powers Act. The Section 122 surcharge was set to expire July 24.
The court rejected the administration's argument that the statute's reference to "balance-of-payments deficits" is equivalent to a trade deficit. The majority wrote that permitting the president to select among sub-accounts to identify such a deficit would grant the executive virtually unlimited tariff authority that belongs to Congress. The third judge dissented, finding the law allows the president broader leeway.
The injunction applies only to the plaintiffs, namely, two small businesses and the state of Washington, while collections continue for most importers. Claims brought by a larger group of Democratic-led states were dismissed for lack of standing. The Department of Justice filed a notice of appeal on May 8 with the US Court of Appeals for the Federal Circuit.
The ruling does not affect steel and aluminum tariffs, which were imposed under Section 232 of the Trade Expansion Act of 1962 on national security grounds and remain in force.