US Trade Court Rules Trump's Global Tariffs Illegal, But Impact May Be Limited

Trump's Tariff War Key News

(Central News Agency, New York, 7th comprehensive foreign report) The US International Trade Court today ruled that the temporary global tariffs implemented by President Trump in February this year do not comply with the authorization basis of the 1974 Trade Act. However, the ruling only prohibits the collection of tariffs from the plaintiff companies and does not involve other importers, so the actual impact remains to be seen.

The New York Times pointed out that for Trump, who is preparing to visit China next week to discuss trade issues with Chinese leader Xi Jinping, this latest ruling is another major setback. Tariffs are expected to be an important topic on the Trump-Xi agenda, and this ruling will inevitably weaken Trump's bargaining chips.

In this 53-page ruling, the three-judge panel of the Trade Court, by a 2-1 decision, determined that the current situation has not yet met the legal threshold required to invoke Section 122 of the 1974 Trade Act for imposing additional tariffs. The ruling cited the legislative intent, stating that Section 122 "documents a series of efforts to prudently limit the president's discretion in trade matters."

Jeffrey Schwab, Litigation Director of the Liberty Justice Center, a legal group representing the small businesses plaintiffs in this case, said: "Section 122 was passed against the backdrop of a specific historical crisis, when the US's currency and gold reserves were being depleted, but this is not the case today."

The Trade Court today declared the global tariffs unlawful, but the judges only explicitly prohibited the federal government from collecting these tariffs from the small businesses that filed the lawsuit. The actual impact may be limited, and the Trump administration is expected to appeal.

However, the Wall Street Journal believes that although the Trade Court did not issue a nationwide injunction, since the ruling has determined that the president overstepped his authority, other importers can choose to also cite this ruling to sue the court, forcing the federal government to find it difficult to maintain this tariff on more other importers.

Trump invoked Section 122 to impose temporary global tariffs on February 20 this year, after the Federal Supreme Court ruled that the president had no right to implement reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). Section 122 grants the government 150 days to implement a maximum 15% tariff, after which Congress intervenes. The Trump administration wanted to use this to buy time to introduce a new tariff policy in July.

Reuters reported that the U.S. Court of International Trade ruled that all importers other than the plaintiffs must still pay this temporary tariff during the Trump administration's appeal. This tariff is expected to expire in July.

The International Trade Court ruled that Trump's imposition of tariffs under Section 122 of the 1974 Trade Act was improper. However, one judge believed that it was still too early to declare the plaintiffs victorious.

The International Trade Court in New York also rejected the application by 24 states to follow suit, refusing to issue a comprehensive injunction applying this ruling to all importers; most of these states are Democrat-led states. The Trade Court believes that, except for Washington State, most of the plaintiff state governments are not importers themselves, and have not actually paid or may not have to pay these Section 122 related tariffs.

Reuters also believes that although this ruling concerns tariffs that are due to expire in about two months, it is another major setback for Trump's global tariff policy, and it comes just before he is scheduled to discuss trade tensions with Chinese President Xi Jinping next week.

Dave Townsend, International Trade Team Partner at Dorsey & Whitney law firm, said: "The US government will undoubtedly appeal today's ruling, and it will then be further reviewed by the Federal Circuit Court of Appeals and the Supreme Court." He stated that other importers are now very likely to also ask the court to expand the scope of application.

Two small businesses - toy company Basic Fun! and spice importer Burlap & Barrel - argued that Trump's new tariff measures were an attempt to circumvent the Supreme Court's previous overturn of reciprocal tariffs.

Jay Foreman, CEO of Basic Fun!, said: "This ruling is a significant victory for American businesses that rely on global manufacturing to provide safe and affordable goods. Illegal tariffs make it harder for companies like ours to compete and grow."

Former US trade officials said that the Trump administration is likely to appeal and may implement permanent tariffs later this year under other legal authorizations.

Ryan Majerus, a former senior official at the US Department of Commerce and now an attorney at King & Spalding law firm, said: "The US government will appeal this ruling, but will continue to collect most of the Section 122 10% tariffs until July 24, when they may be replaced by permanent Section 301 tariffs." (Compiled by: Hsu Rui-cheng, Chen Yi-wei) 1150508

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