(CN) – A federal court on Thursday found President Donald Trump in violation of the law for imposing a global 10% tariff on US imports – another blow to the administration’s efforts to impose sweeping tariffs without congressional approval.
A three-judge split panel at the U.S. Court of International Trade found that Trump wrongly invoked a decades-old trade act to meet his tariff goals after a rare rebuke of the Supreme Court hit back at White House efforts to issue unilateral international tariffs in February.
of majority decision by Judges Mark Barnett and Claire Kelly puts a check on Trump’s tariff powers, which he has exercised heavily for the stated purposes of protecting U.S. manufacturing and increasing economic leverage in other countries.
While the court dismissed claims from 23 of the 24 plaintiff states for lack of legal standing, it issued a permanent injunction in favor of the state of Washington and two private companies, labeling the parties as “direct importers” who have suffered concrete injury in paying tax bills to the federal government.
Thursday’s ruling — which is expected to be appealed by the Trump administration — raises the possibility that Trump may have to refund billions collected under sweeping tariffs implemented during his second term.
After February’s Supreme Court ruling underscored Congress’ power to implement tariffs, Trump immediately moved to use a largely unused provision in the Trade Act of 1974, which allows a president to impose tariffs of up to 15% for up to 150 days to address emergency deficits or currency crises.
The president’s action was quickly met by one the second lawsuit of the state coalition claiming Trump was vaguely relying on an “archaic” law.
Barnett and Kelly, both appointed by Barack Obama, found that the president failed to meet the threshold required to invoke Section 122 of the Trade Act, aligning with the coalition’s concerns that a section designed to offset economic risks when the US dollar was backed by gold has little application in today’s floating exchange rate economy.
The Trump administration previously claimed high trade deficits with other countries and the outflow of US dollars supported its move to use the act, despite widespread skepticism and disagreement.
“This case turns on the meaning of Article 122 and whether the President asserted the existence of the conditions required by the statute to lawfully promulgate import surcharges,” the majority wrote, noting that the president enjoys “no inherent authority” to impose tariffs.
“Once again, the courts have made clear that the president cannot unilaterally rewrite our trade laws to suit his political agenda,” New York Attorney General Letitia James said in a statement. press release. “Unlimited charges were illegal the first time, and changing the label didn’t make them any less illegal the second time around.”
While James, along with 22 other states in the coalition, had their claims dismissed, they largely got what they wanted as the court still dismantled the executive’s attempted trade practices.
Washington state Attorney General Nick Brown, who represents the only state granted an injunction, said the ruling opens the door for other parties to challenge the fees in court.
“This is a win for both affordability and the rule of law,” Brown said in one press release. “It is American consumers and businesses who have ultimately paid for the president’s campaign of illegal tariffs. The court’s order will encourage more parties to challenge this illegal executive overreach.”
In a dissent, Judge Timothy C. Stanceu, a George W. Bush appointee, contends that the majority jumped the gun and should not have decided the case as a legal issue without further investigating the economic realities cited by the government, arguing that there is a moot point as to whether or not the kinds of deficits referenced in the modern financial system of the modern decade could exist.
“At various times in the nation’s history and in various ways, Congress has delegated to the president the power to change the tariff treatment of goods imported into the United States,” Stanceu wrote. “Section 122 is such a statute. Under specific circumstances, it empowers the president to restrict imports by temporarily imposing or increasing tariffs or quotas.”
In the previous Supreme Court case, a group of small businesses said Trump’s tariffs could amount to a tax increase of more than $3 trillion for Americans over the next decade — noting that the increase would hit the poorest Americans hardest and cost thousands of jobs.
Trump, who claimed his tariff appeal was the most important Supreme Court case in history, furiously berated the Supreme Court justices after the unfavorable February ruling, calling some members of the court “fools and fools for RINOs and radical leftist Democrats.”
In one of three dissents, Judge Brett Kavanaugh offered Trump a roadmap for implementing the tariffs regardless of the ruling, which included the 1974 Trade Act.
Jeffrey Schwag, senior counsel at the Liberty Law Center, which represents one of the private parties granted the injunction, praised the decision in a STATEMENTechoing that Section 122 was enacted in response to a very specific historical crisis.
“Congress authorized the president to impose tariffs where the United States had fundamental international payments problems and needed to respond to large and serious balance of payments deficits,” he said. “That’s not the situation here.”
The White House did not respond to an initial request for comment.
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