US federal court overturns Trump’s tariffs

The US Court of International Trade (CIT) has unanimously ruled that President Trump exceeded his authority by imposing tariffs on dozens of trade partners.

The unanimous decision by the federal court’s three-judge panel struck a blow to a cornerstone of the President’s economic policy at a time when Donald Trump was attempting to use tariffs as leverage to sign trade deals worldwide.

Oregon Attorney General Dan Rayfield, who filed the lawsuit against Trump’s tariffs along with 11 other state attorneys general, stated, “Today’s court decision is a victory not only for Oregon but also for working families, small businesses, and ordinary Americans. President Trump’s sweeping tariffs were illegal, reckless, and economically devastating.”

Arguing that the Constitution does not grant any president “unlimited authority to disrupt the economy,” Rayfield added, “This decision reaffirms that our laws matter and that trade decisions cannot be made by the arbitrary whims of the president.”

The court’s decision also means the government may have to refund tariffs already collected. Ilya Somin, a law professor at George Mason University and an attorney in a case brought by several small businesses against the tariffs, said, “Everyone who has paid tariffs so far will be able to get that money back.”

The Department of Justice quickly filed an appeal, paving the way for further legal debate on the scope of Trump’s tariff authorities. Ultimately, the case could reach the Supreme Court.

Trump had justified imposing tariffs on dozens of countries based on national emergency declarations related to fentanyl trafficking and the ongoing threat of trade deficits. Trump also imposed retaliatory tariffs on countries that responded in kind.

However, the court found that the International Emergency Economic Powers Act (IEEPA) of 1977, a federal law granting the president authority to impose tariffs, embargoes, and sanctions in national emergencies, “does not grant the president unlimited authority to impose tariffs.”

The New York-based federal court, which hears cases related to trade laws, opined, “Worldwide and retaliatory tariff decisions exceed the authority granted to the President by IEEPA to regulate imports through tariffs.”

The court invalidated Trump’s presidential decrees that imposed a 25% tariff on Canadian and Mexican products and a 20% tariff on Chinese goods, citing the national emergency related to drug trafficking.

Additionally, a 10% tariff applied to all US trade partners to address the trade deficit and “reciprocal” tariffs ranging from 20% to 50% imposed by Trump on nearly 60 trade partners were also overturned.

These tariffs were set to take effect on July 9 if foreign governments did not reach an agreement with the White House by that date.

During a hearing before the CIT last week, Assistant Attorney General Brett Shumate argued that a decision prohibiting Trump from collecting tariffs would “bring to its knees” the president’s efforts to sign new trade deals by July 8, including with leading trade partners such as Japan, India, and the European Union.

Shumate added, “While the President is conducting external negotiations with other countries on the trade deficit and the fentanyl crisis, an injunction would be extremely disruptive.”

The decision, delivered Wednesday evening, covers a lawsuit filed by V.O.S. Selections, a New York-based wine company, and several other small businesses, and a separate lawsuit by Oregon and 11 other Democrat-led states questioning the constitutionality of Trump’s actions.

The ruling was issued by a three-judge panel consisting of Gary Katzmann, an Obama appointee; Jane Restani, a Reagan appointee; and Timothy Reif, a Trump appointee. No specific judge was identified as the author of the court’s opinion.

Meanwhile, it is indicated that Trump might try to implement the same tariffs under other laws.

Furthermore, the decision does not affect other tariffs imposed by Trump under Section 232 of the Trade Expansion Act of 1962, which allows the president to introduce new taxes on national security grounds.

Trump used this provision in March to expand existing steel and aluminum tariffs and impose a 25% tax on foreign car imports.

The administration has launched several other Section 232 investigations that could lead to future tariffs on semiconductors, pharmaceuticals, and a range of other products.