Supreme Court overturns most of Trump’s tariffs

San José, CA – On Friday, February 20, the Supreme Court of the United States, or SCOTUS, ruled by a 6-3 vote that most of Trump’s trumps tariffs were illegal.

The court singled out Trump’s use of the International Economic Emergency Powers Act, or IEEPA, to levy tariffs on almost all countries and particular tariffs on Canada, China and Mexico – allegedly for facilitating the importation of fentanyl into the United States. The legal basis for the ruling was that the IEEPA makes no mention of tariffs.

This is the first major case where SCOTUS has limited the power of the presidency under Trump.

Trump was not happy about the decision, saying, “I can do anything I want” and re-imposed a global 10% tariff on imports using the Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% in response to a “large and serious” balance of payments deficits. The United States has been running large and serious trade deficits for decades, mainly because U.S., European and Japanese corporations have offshored production meant for the U.S. market, for example Apple’s computers and smartphones.

However, this law only allows for tariffs for a period of 150 days, meaning that Trump would have to ask Congress to agree to an extension in July. This is very unlikely to happen with the midterm elections looming.

Trump is also likely to expand sectoral, or good specific tariffs under section 232 of the Trade Expansion Act of 1962 where imports are a “threat to national security.” He has already used this to put tariffs on aluminum, steel, copper, lumber and wood products. This act is commonly misused because the threat to national security is not defined.

For example, imported kitchen cabinets are being tariffed because the wood products industry is claimed to be important to national security. However, this act requires an investigation and finding by the Commerce Department which takes time and effort and cannot be done on a whim.

In a sign that the chaotic tariff rollout and retractions are not over, the day after Trump declared 10% global tariffs, he raised the rate to 15%, the maximum allowed by law. Still to come will be lawsuits by U.S. companies seeking to be reimbursed for the billions of dollars in the illegal tariffs that they paid. Finally, are the review of the USMCA (formerly NAFTA) coming up in July, where the United States is expected to try to tighten trade rules.

While the SCOTUS decision was a setback to Trump’s imperial presidency, it by no means a return to a more free trade approach.

Both Democrats and Republicans are likely to restrict trade, in particular with China, which is surpassing the United States in one industry after another. For example, Trump used the section 301 of the Trade Act of 1974 in his first term to impose tariffs on imports from China on the basis of “unreasonable or discriminatory” trade practices by a country as found by the U.S. trade representative. These tariffs were maintained by the Biden administration and continue to this day.

Even a future Democratic administration is likely to keep major tariffs, especially since there are now industries benefiting from protection.

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