The recent decision by the US Court of International Trade has delivered a significant legal rebuke to the Trump administration’s trade policy. In a closely split 2-1 verdict, the court ruled that the 10 percent global tariff imposed earlier this year was both “invalid” and “unauthorized by law.” This legal determination forces the administration to cease collecting these tariffs from the state of Washington, spice company Burlap & Barrel, and toy company Basic Fun, with previous payments subject to refund.
The court’s decision specifically referenced the limitations under Section 122 of the Trade Act of 1974, designed to address an “international balance-of-payments disequilibrium.” This section allows for a temporary tariff imposition, one that cannot exceed 15 percent for a period exceeding 150 days. The ruling comes in the wake of the Supreme Court’s opposition to Trump’s strategic use of the 1977 International Emergency Economic Powers Act, which has already constrained the administration’s trade latitude according to JURIST.
Trump has expressed dissatisfaction with the Supreme Court, describing the decision as “deeply disappointing” and criticizing certain justices. In response, the administration is pivoting towards several investigations under Section 301 of the Trade Act, seeking to address unfair trade practices. These investigations necessitate that the United States Trade Representative conduct a comprehensive assessment before any countermeasures are enacted.
Currently, the US is pursuing four such Section 301 investigations. These include probes into Brazilian practices and compliance with commitments made by China under the “Phase One” agreement. Additionally, recent inquiries are scrutinizing whether key trading partners like the European Union, China, and Japan are affecting US markets by overproduction. Another significant focus is the conduct of 60 nations regarding the prohibition of trade in items made with forced labor.
If the current administration decides to appeal the Court of International Trade’s ruling, the case will proceed to the US Court of Appeals for the Federal Circuit. This legal pathway reflects the ongoing contentious maneuverings in US trade policy, a legacy of the Trump era that continues to resonate through multiple layers of the judiciary and international trade dynamics as reported by Bloomberg.