A federal court ruled May 7 against the new global tariffs that that President Donald Trump imposed after a stinging loss at the U.S. Supreme Court.
A split three-judge panel of the Court of International Trade in New York found the 10% global tariffs were illegal after small businesses sued.
The court ruled 2-1 that Trump overstepped the tariff power that Congress had allowed the president under the law. The tariffs are “invalid″ and “unauthorized by law,” the majority wrote.
The third judge on the panel found the law allows the president more leeway on tariffs.
If the administration appeals the decision, as expected, it would first turn to the U.S. Court of Appeals for the Federal Circuit, based in Washington, and then, potentially, the Supreme Court.
At issue are temporary 10% worldwide tariffs the Trump administration imposed after the Supreme Court in February struck down even broader double-digit tariffs the president had imposed last year on almost every country on Earth. The new tariffs, invoked under Section 122 of the Trade Act of 1974, were set to expire July 24.
The court’s decision directly blocked the collection of tariffs from three plaintiffs — the state of Washington and two businesses, spice company Burlap & Barrel and toy company Basic Fun! “It’s not clear’’ whether other businesses would have to continue to pay the tariffs, said Jeffrey Schwab, director of litigation at the libertarian Liberty Justice Center, which represented the two companies.
“We fought back today and we won, and we’re extremely excited,” Jay Foreman, CEO of Basic Fun!, told reporters.
The ruling marked another legal setback for the Trump administration, which has attempted to shield the U.S. economy behind a wall of import taxes. Last year, Trump invoked the 1977 International Emergency Economic Powers Act (IEEPA) to declare the nation’s longstanding trade deficit a national emergency, justifying sweeping global tariffs.
The Supreme Court ruled Feb. 28 that IEEPA did not authorize the tariffs. The U.S. Constitution gives Congress the power to establish taxes, including tariffs, though lawmakers can delegate tariff power to the president.
Dave Townsend, a trade lawyer at Dorsey & Whitney, said the ruling will open the door for more companies to request that the tariffs be thrown out and that any payments they’ve made be refunded.
“Other importers likely will now ask for a broader remedy that applies to more companies,” Townsend said, though he cautioned the case could also reach the Supreme Court.
Trump is already taking steps to replace the tariffs that were struck down by the Supreme Court in January. The administration is conducting two investigations that could end in more tariffs.
The Office of the U.S. Trade Representative is looking into whether 16 U.S. trading partners — including China, the European Union and Japan — are overproducing goods, driving down prices and putting U.S. manufacturers at a disadvantage. It is also investigating whether 60 economies — from Nigeria to Norway and accounting for 99% of U.S. imports — do enough to prohibit the trade in products created by forced labor.
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