The court found that the tariffs were not allowed under a 1974 trade law.
The U.S. Court of International Trade on May 7 struck down President Donald Trump’s 10-percent global tariffs under the Trade Act of 1974.
The court ruled 2–1 in favor of small businesses and several states that contested the tariffs, which had taken effect on Feb. 24. The dissenting judge said it was premature to rule on the dispute.
The challengers had argued that the tariffs were the Trump administration’s attempt to sidestep a U.S. Supreme Court ruling that struck down the president’s tariffs levied under the International Emergency Economic Powers Act.
The tariffs consisted of temporary 10 percent value-based import duties imposed in addition to existing tariffs on most goods entering the United States from all countries.
In his February order levying the tariffs, Trump relied on Section 122 of the Trade Act, which permits duties to be imposed for as many as 150 days to remedy serious “balance of payments deficits” or combat an imminent depreciation of the U.S. dollar.
The federal government had argued that there was a significant balance-of-payments deficit in the form of a $1.2 trillion annual U.S. goods trade deficit, along with a current account deficit of 4 percent of the gross domestic product.
The trade court’s majority held that Trump had gone beyond what the statute allowed. It found that the tariffs were “invalid” and “unauthorized by law.”
In addition to finding the tariffs were illegal, the court issued a permanent injunction preventing the government from collecting the duties from Washington state and two companies that brought suit over the policy.
Although more than 20 states sued, the court found all but Washington lacked standing, or a close enough connection to the controversy, to justify participating in the case. The court ruled the toy company, Basic Fun, and spice importer, Burlap and Barrel, had standing.
Other companies may sue to seek relief from the tariffs, citing the trade court’s new precedent.
