On Friday, I posted on the ruling of a divided three-judge panel of the United States Court of International Trade (CIT), holding that the 10 percent across-the-board tariffs President Trump imposed were invalid under Section 122 — the 1974 Trade Act provision on which the president purported to rely in setting them. Trump announced the Section 122 tariffs in February, right after the Supreme Court struck down the tariffs he’d imposed under the 1977 International Emergency Economic Powers Act (IEEPA); those tariffs, too, had initially been invalidated by the CIT.
As one would expect given the history, the administration is appealing. The New York Times reports that the Justice Department filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit (which also ruled against the Trump IEEPA tariffs before the Supreme Court weighed in).
There is some confusion about what will happen next. The CIT’s ruling was limited to some of the plaintiffs in the case, not others (which the court found lacked standing). Moreover, while concluding that the Section 122 tariffs were ultra vires, the CIT did not order the administration to stop collecting them. This increases the likelihood that there will be more lawsuits brought by other importers who’ve had to pay the tariffs (reminder: A tariff is a tax that is paid by the American importer, not — as the president maintains — by the foreign country against whose exports the tariffs are applied).
The administration will likely ask the CIT to stay its order while the appeal proceeds. I expect the CIT would accommodate such an application. The lower court rulings on the IEEPA tariffs were stayed until the Supreme Court finally ruled.
While the president often claims that “trillions” of dollars poured into our country as a result of the IEEPA tariffs, the total was probably under $200 billion — and, again, that amount represents taxes American pay into the U.S. treasury, not assessments paid by foreign countries. The Customs and Border Protection agency (part of the Department of Homeland Security) calculates that the government owes approximately $166 billion to importers who paid the illegal IEEPA tariffs. The amount of taxes paid as a result of the Section 122 tariffs over the past ten weeks is just a fraction of that — probably under $25 million — but whether the government will be on the hook, and for how much, will depend on what happens as the court challenges proceed.
Foolishly — counterproductively — administration officials are grousing that the CIT decision came on the eve of the president’s trip to China this week, during which he hopes to cut some kind of deal with Xi Jinping’s communist regime on various issues, particularly trade. The implication is that the court weakened the president’s hand in negotiations. The Times quotes a top administration trade adviser, Jamieson Greer, as sniping that the judges who ruled against the president are “apparently just hellbent on importing more from China.”
In reality, as elaborated on in my post, the judges were trying to construe the statutory term “balance of payments.” The Trump administration had plenty of warning that the term meant something very different from “balance of trade,” the term to which the administration tried to equate it. As with their rulings on the IEEPA tariffs — which the president capriciously imposed despite the lack of precedent, the lack of the word “tariff” in the statutory text, and the stark dissimilarity between the IEEPA and statutes (like Section 122) by which Congress delegates limited tariff power to presidents — the courts are not trying to help foreign countries and nasty regimes. They are interpreting law and, thereby, protecting Americans who have been financially damaged by the president’s illegal tax-raising.
If administration officials figure the way to win over the judges is to publicly smear them as agents of China, they probably ought to rethink that one.