Federal Court: Trump's Newest Tariffs Are Also Illegal

President Donald Trump’s tariffs have been ruled illegal—again.

A three-judge panel at the U.S Court of International Trade (CIT) ruled Thursday evening that Trump’s 10 percent “global tariff” is unlawful. The president imposed those tariffs in February, just hours after the U.S. Supreme Court blocked Trump’s attempt to use emergency powers to impose a sweeping set of tariffs on most imports.

The new tariffs were implemented under Section 122 of the Trade Act of 1974, which allows presidents to impose temporary tariffs in response to “large and serious United States balance-of-payments deficits.”

As Reason and other observers pointed out at the time, the U.S. does not have a balance-of-payments deficit—something that is fundamentally different from the trade deficit that the Trump administration is trying to address with tariffs.

That view was vindicated by the CIT, which ruled Thursday that the president cannot impose tariffs under Section 122 without that prerequisite.

“Nowhere does [Trump's executive order imposing the tariffs] identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974,” the judges ruled. Because of that, the executive order “is invalid, and the tariffs
imposed on Plaintiffs are unauthorized by law.”

The lawsuit challenging those new tariffs was filed by the Liberty Justice Center on behalf of several small businesses.

“This ruling is a major victory for small businesses like ours that depend on fair and predictable trade policy. These tariffs created real challenges for our company and for the farmers we partner with around the world,” Ethan Frisch and Ori Zohar, co-founders and co-CEOs of Burlap & Barrel, an online spice retailer, said in a statement provided by the Liberty Justice Center. “Today’s decision helps ensure that businesses like ours are not unfairly burdened by unlawful trade restrictions.”

The Trump administration will have a chance to appeal Thursday’s ruling. However, the prospects for success seem slim, given the fact that Trump’s use of Section 122 ignores the plain language of the law and invokes a broad executive power where Congress clearly provided a narrow one.

The loss also likely means the Trump administration will once again have to refund revenue collected from illegal tariffs.

With this latest defeat, Trump has now racked up five consecutive losses in tariff-related cases during his second term. The previous “emergency” tariffs were ruled unlawful four different times: by the CIT, by a federal district court, by a federal appeals court, and, ultimately, by the U.S. Supreme Court.

Maybe Trump will finally get the message. The president does not have unchecked, unilateral power to impose tariffs for any reason and at any time. Thursday’s ruling is another victory for the rule of law.

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