There’s a new twist on the trade war front. The judges of the US Court of International Trade ruled yesterday that under the 1977 International Emergency Economic Power Act, the US President does not have the power to unilaterally impose tariffs on imports.
Basically, the Court considers that this law does not allow the president to bypass Congress, which has authority over trade policies. Moreover, the trade deficit, used as an excuse by Trump to announce the duties on Liberation Day, would not, according to the Federal Court, constitute an extraordinary threat to the nation.
On these grounds, the judges have issued a permanent injunction against reciprocal tariffs and ordered the administration to implement it within the next ten days.
As things stand, Trump would no longer have the power to use duties to impose his will on the global economy. The only weapon that would remain available to him, because it is permitted under Section 122 of the 1984 Trade Act, is 15% import taxes for 150 days on countries which the US has a trade deficit with.
“In practical terms, this adds a new level of uncertainty into the mix for US importers,” says Vespucci Maritime CEO Lars Jensen in a post. “Not only do they have to contend with the risks associated with changing tariffs. Now it is also cast into doubt whether or not the announced tariffs will even be implementable – and this also raises the question whether tariffs paid in recent weeks can ultimately be reclaimed. If the tariffs are ultimately (after appeals) found to be unlawfully implemented, shippers should have a good case for getting the paid tariffs back.,” he concludes.
It is not clear how the judges’ decision will affect the negotiations with the EU and China which began a few weeks ago.
Raising hopes for a solution to the trade war, Trump had recently decided to put reciprocal tariffs against China on hold for 90 days. While the temporary suspension of punitive tariffs against all other countries had been announced in April.
Translation by Giles Foster
