WASHINGTON , May 8 – A U.S. trade court on Thursday ruled against the 10 percent global tariff imposed by President Donald Trump’s administration earlier this year, dealing another blow to a pillar of his economic agenda.
The tariff took effect in February to replace Trump’s so-called reciprocal duties targeting almost all U.S. trading partners, as well as fentanyl-related levies he applied to goods from China, Canada and Mexico, after the Supreme Court invalidated them.
The latest decision, blocking the administration from enforcing the new tariff, only applies to the state of Washington and two companies. The three were among the plaintiffs of the lawsuit lodged in March by small businesses and 24 states, mostly led by Democrats.
The trade court said the other plaintiffs did not have standing to challenge the global tariff.
Although the administration will likely appeal the decision, it is unclear whether the injunction will have an immediate impact on importers other than the three plaintiffs.
Trump announced the blanket duty under a different legal authority just after the highest court struck down his country-specific tariffs on Feb. 20.
However, in a 2-1 ruling, a panel of federal judges at the U.S. Court of International Trade in New York found that the administration’s use of Section 122 of the Trade Act of 1974 to impose the 10 percent tariff lacked legal grounds.
The statute allows a president to impose tariffs of up to 15 percent to address “large and serious” balance-of-payments deficits. It permits such measures to only last 150 days unless Congress approves an extension.
The plaintiffs had argued that Trump’s interpretation of the statute was flawed, conflating the “balance of payments” with the “balance of trade.”
They had also claimed that serious balance-of-payments deficits cannot occur in a floating exchange rate monetary system.
No president had previously used Section 122 to impose tariffs.
Among other points, the majority said in the ruling that the tariff is “unauthorized by law” as it is “clear that Congress was aware of the differences in the words it chose” in the 1970s.
While implementing the temporary tariff, which will last until July 24 for all other importers, the administration is exploring the possibility of imposing more permanent country-specific duties on national security grounds, based on a different statute, such as Section 301 of the trade law.
Last year, Trump invoked the 1977 International Emergency Economic Powers Act to swiftly implement the sweeping double-digit tariffs without congressional approval.
The top court’s decision said Trump overstepped his presidential powers when he used the emergency law, because taxation is an enumerated power of the legislative branch.
