(May 12): The Trump administration asked the US trade court to pause a ruling that declared the president’s latest 10% global tariffs unlawful while the government appeals, meaning importers would keep paying the levies while the legal fight continues.
In a 2-1 decision last week, a US Court of International Trade panel found that US President Donald Trump’s use of Section 122 of the Trade Act of 1974 to impose the tariffs was invalid, although the court only immediately blocked enforcement for two companies that sued and Washington state.
Despite the limited scope of the court’s order for now, the Justice Department argued in a Monday filing that thousands of importers paying the Section 122 tariffs were likely to flood the court with claims. Allowing the decision to take effect would “severely undermine” Trump’s trade agenda and syphon resources away from the “vast effort” underway to refund an earlier round of global tariffs struck down by the US Supreme Court, government lawyers wrote.
The trade court rejected the administration’s stance that “balance-of-payments deficits” — a key criterion for imposing the Section 122 tariffs — was “a malleable phrase". They found that Trump’s proclamation imposing the levies failed to identify that such deficits existed within the meaning of the 1974 law, instead using “trade and current account deficits to stand in the place”.
The government’s appeal of that decision is pending before the US Court of Appeals for the Federal Circuit. The Justice Department said in Monday’s filing that if the trade court and the Federal Circuit refuse to pause the ruling, the administration is poised to make an emergency request to the Supreme Court.
The justices earlier this year struck down Trump’s global tariffs under a different law, the International Emergency Economic Powers Act (IEEPA). A refund process launched in April but there is uncertainty about whether all companies that paid the IEEPA tariffs will be able to get their money back.
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More than 170,000 importers have paid deposits to cover new tariffs under Section 122 on 13 million entries of goods since Trump’s proclamation took effect in February, according to the government. US customs authorities collected roughly US$8 billion in Section 122 tariffs in March alone, according to government data analysed by We Pay the Tariffs, a coalition of small businesses.
Sara Albrecht, CEO of Liberty Justice Center, one of the groups involved in the litigation, said in a statement that the prospect of future refunds “will never make these companies whole”.
“The Court of International Trade correctly ruled that the Section 122 tariffs are unlawful," Albrecht said. “The government’s motion to stay that decision only prolongs the uncertainty for American businesses that need stability, predictability and to rely on the rule of law.”
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US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick submitted declarations to the court on Monday making the case for keeping the tariffs intact until they’re set to expire in July. Greer said the levies are “critical” to keeping trade partners engaged in negotiations. Lutnick described them as “the only global baseline currently restraining an unprecedented spike in import flows while the administration continues to address the United States’ balance of payments issues".
The cases are Oregon v Trump, 26-cv-1472, and Burlap and Barrel Inc v Trump, 26-cv-1606, US Court of International Trade (Manhattan).
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