Input Stories

A majority of the U.S. Court of International Trade ruled against President Trump’s 10% tariffs imposed under Section 122 of the Trade Act of 1974.

What happened: Two judges found in favor of the plaintiffs, focusing on what the 1974 Congress understood “balance-of-payments deficits” to mean.

• The plaintiffs argued the administration improperly focused on the nation’s “current account” to target trade deficits while ignoring other factors in the overall balance of payments, such as financial investment inflows.
• Because it ruled the administration’s analysis did not comport with this definition, it did not address other elements of the case, including whether the exemptions for USMCA-qualifying goods were lawful.

The relief: The court majority issued a permanent injunction, providing tariff relief for the state of Washington and the two private plaintiffs that are importers of record, and dismissing the claims of the remaining 23 U.S. states, who had not acted as importers and therefore lacked standing.

• Given the narrow scope of relief, other importers would need to file suits based on the same claims to seek an injunction.

Order halted: The Department of Justice filed a notice of appeal on May 8, asking the U.S. Court of Appeals for the Federal Circuit to overrule the CIT decision.

• In response, the Court of Appeals issued an administrative stay, and “set a schedule for both sides to file briefs on the longer-term delay issue in the coming two weeks” (Bloomberg Government).
• During those two weeks, the importers to whom the CIT ruling applies will continue to pay tariffs under Section 122.

Looking ahead: Section 122 tariffs are set to expire on July 24 unless extended by Congress.