The Tariff Times: Liberation Day Tariffs struck down by Federal Trade Court

Court strikes down Trump reciprocal tariffs – CNBC

Update III: The tariffs have been reinstated by the U.S. Court of Appeals for the Federal Circuit, at least temporarily. 

Update II: The Administration may ask the Supreme Court to halt the tariff block as soon as Friday (CNBC), which is interesting because there are about half-a-dozen other laws they could use to impose tariffs. Some of which the Court of International Trade even referenced in their ruling striking down the Reciprocal and Fentanyl Tariffs. So for now, it appears that if the President and his Administration pick the right statutes, they may be able to implement their overall tariff policy/strategy after all. Section 338 of Smoot-Hawley (page 59 here, and yes it’s that Smoot Hawley) seems to be the leading option at present. Whether the bond or equities markets would again react strongly enough to make them walk back any future historically severe & sweeping tariffs is another question.

Update: The Wall Street Journal points out that the trade war is far from over: “The court’s decision doesn’t affect a host of other tariffs… including 25% levies placed on steel, aluminum and cars” as those were implemented using other laws. Trade experts are pointing to section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 as other legal strategies the Administration may use to continue to enact expansive tariffs and levies.

The President’s wide-ranging tariffs have been blocked by the Court of International Trade, which while obscure, is a Congressionally created court with nationwide jurisdiction over tariff and trade disputes.

The three judge panel ruled the President and his administration:

1. Overstepped their legal authority. (Fox Business)
2. Over-stated the threat of trade deficits which were used as rationalization for the so-called reciprocal tariffs. (WSJ)
3. The tariffs imposed due to the fentanyl crisis on Canada, Mexico, and China didn’t actually deal with that threat. (pg. 36 of the ruling).

Implementing tariffs usually requires Congress, but the Executive Branch has been arguing that as the President declared a national emergency under the National Emergencies Act, he therefore is granted broad powers to enact tariffs due to the International Emergency Economic Powers Act, which says a President would have power to “deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States.”

In their ruling, the three judge panel said:

• “The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 (“IEEPA”) delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country in the world.”
• “We do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers.”
• “The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.”
• “The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders.”

The court ruled in favor of a permanent injunction and gave 10 calendar days for administrative orders “to effectuate the permanent injunction.” (CNN)

The Administration said they’ll file an appeal immediately.

Congress created the Court of International Trade in 1980 as a successor to the U.S. Customs Court. They’re like any other district court in the United States, which means this very well could go all the way up to the Supreme Court.

 

Also related:

• What else can Trump do on global tariffs after US court ruling? (Reuters)
• V.O.S. Selections v. Trump (the full ruling)
• U.S. Constitution Article 1, Section 8, Clause 1 and Clause 3 (Authorizes Congress to “lay and collect Taxes, Duties, Imposts and Excises” and “regulate Commerce with foreign Nations”)
• On Tariffs (Dappered post)
• I Like Turtles (why not)