Trade Court Slaps Down Trump’s Tariffs (Again)

After the Supreme Court invalidated Donald Trump’s arbitrary tariffs earlier this year, the president put in place his backup plan: a 10 percent global import tax. On Thursday, a federal court determined that this was illegal as well.

In a 2-1 ruling, the US Court of International Trade found that Trump’s use of Section 122 of the Trade Act of 1974 is not lawful. The administration had argued that simply running a trade deficit allowed the president to impose the duties.

This, according to the court, was not in line with the language of the law and Congress’s intent when it was enacted.

“Section 122 was passed in response to a specific historical crisis that resulted in the United States’s currency and gold reserves being depleted,” noted Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center, which represented the two companies that had sued the administration over the policy. “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. That is not the situation here.”

For now, the ruling only prevents the administration from collecting the tariffs from these two businesses — a Florida toy company and a New York-based online spice retailer — as well as the state of Washington, which had sued the federal government after the president announced his new plan to penalize companies for importing goods.

“This decision is an important win for American companies that rely on global manufacturing to deliver safe and affordable products. Unlawful tariffs make it harder for businesses like ours to compete and grow,” said Jay Foreman, the CEO of the toy company, who added that the “ruling brings needed clarity and stability for companies navigating global supply chains.”

It is also good news for Americans who are being crushed by higher prices.

Contrary to Trump’s claims, it is consumers and the importing companies who end up footing the bill for the president’s pet policy.

Dan Anthony, the executive director of We Pay the Tariffs, a coalition of more than 1,000 small businesses, hailed the overall decision but lamented that it did not provide relief for more companies.

“Today’s ruling is more positive news for the small businesses that have been crushed by these illegal taxes,” he said. “The Court should have gone further and blocked collection of these tariffs during any appeal. American businesses paid roughly $8 billion in Section 122 tariffs in March alone, and that was just the beginning of their impacts.”

Still, the ruling can be used as a precedent for other companies forced to pay Trump’s tariffs.

Unfortunately for US businesses and consumers, it is unlikely that the decision, which the administration is expected to appeal, will end the president’s crusade to put tariffs on imported goods.

Just before it was handed down, he had threatened the European Union with additional levies if it failed to codify the trade deal it had reached with the US last year.

And, even if he ultimately fails in this case, there are other statutes Trump can invoke to impose new duties on products made elsewhere and therefore ensure that Americans are forced to continue paying more pay for stuff because their president doesn’t understand how tariffs work.