(Kent Nishimura/Bloomberg via Getty Images)
UPDATE 5/29: The tariffs will remain in place for now, after the US Court of Appeals for the Federal Circuit granted a stay on last night's ruling, "until further notice while this court considers the motions papers."
Original Story:
A US federal court has ruled that President Trump’s most sweeping tariffs are illegal, and ordered their removal.
A three-judge panel from the US Court of International Trade found that the White House exceeded its legal authority to impose worldwide tariffs, including a 10% tariff on dozens of countries and a 30% tariff on Chinese imports.
The court also ordered the Trump administration to remove the tariffs within 10 days, including a 25% tariff on certain goods from Canada and Mexico.
To impose the tariffs, Trump has been invoking the 1977 International Emergency Economic Powers Act (IEEPA), which gives the president the authority to regulate global commerce, but only to address “unusual and extraordinary” threats. Trump has justified the tariffs by citing the flow of fentanyl into the country and the US's trade deficits.
However, the court ruled that the “IEEPA does not authorize any of the Worldwide, Retaliatory, or Trafficking Tariff Orders. The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.”
The court also had problems with the White House arguing that the tariffs are meant to give it leverage to address such threats. This suggests “a President may use IEEPA to take whatever actions he chooses simply by declaring them ‘pressure’ or ‘leverage’ tactics that will elicit a third party’s response to an unconnected ‘threat.' Surely this is not what Congress meant when it clarified that IEEPA powers ‘may not be exercised for any other purpose’ than to ‘deal with’ a threat," the judges said.
The US Court of International Trade made the ruling after the nonprofit Liberty Justice Center filed a lawsuit, claiming Trump’s tariffs were an abuse of power. The nonprofit also filed the legal action on behalf of five small businesses that expected to “suffer irreparable harm if the tariffs remain in effect.” A week later, a coalition of Democratic state attorneys general filed a similar lawsuit, calling the US Court of International Trade to intervene and invalidate Trump’s tariffs.
The ruling could bring relief to electronics vendors and retailers fearing the high import costs of Trump’s tariffs. China remains the hub for global electronics manufacturing, including for PC graphics cards, video game consoles, and smartphones, although companies have been moving their manufacturing to India, Vietnam and Taiwan to avoid Trump’s ongoing trade war.
Despite the ruling, it remains unclear if the Trump administration will follow the court’s judgment and rescind the tariffs, or try to appeal. CNN also reports that the ruling doesn’t affect the White House’s tariffs on auto parts, steel or aluminum, which were more targeted and fall under a different law, Section 232 of the Trade Expansion Act.