In a major setback to theDonald Trumpadministration, a US federal trade court on Thursday struck down the President's latest globaltariff move, ruling that the administration exceeded its authority under a 1974 trade law while trying to impose a 10 per cent import surcharge on goods entering the United States. In a 2-1 ruling, the US Court of International Trade said the Trump administration could not rely on broad trade and current account deficits to justify the tariffs under Section 122 of the Trade Act of 1974.
The court ruled that the law was designed to address specific “balance-of-payments” crises linked to the international monetary system that existed in the 1970s, not modern trade deficits.
Judges Mark A. Barnett and Claire R. Kelly wrote that Trump’s proclamation “fails to assert that those required conditions have been satisfied.”
This comes as a setback for Trump's global tariff ambitions a week before he is due to discuss trade tensions with Chinese President Xi Jinping in Beijing. Trump had imposed the tariffs in February after the Supreme Court earlier this year struck down his previous tariff regime under emergency powers law. The new tariffs were announced under Section 122, which allows temporary import surcharges of up to 15 per cent for 150 days.
The court said the administration relied on current account deficits and trade deficits instead of the narrower “balance-of-payments deficits” Congress intended when it passed the law in 1974.
“Rather than identifying ‘balance-of-payments deficits’ as that term was intended in 1974, the Proclamation relies upon current account deficits, and a discussion of ‘a large and serious trade deficit,’” the majority wrote.
The judges warned that accepting such a broad interpretation would effectively give presidents unlimited tariff authority.
“Such an expansive reading of the statute would raise a non-delegation issue, which in turn would prompt a constitutional question,” the ruling said.
The ruling is expected to be appealed to the US Court of Appeals for the Federal Circuit and could eventually return to the Supreme Court. In February, shortly after the Supreme Court struck down his earlier tariffs under the International Emergency Economic Powers Act, Trump lashed out at the justices during an appearance at the White House briefing room.
“We’re going forward,” Trump said at the time. “We will be able to take in more money.”
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