US Court Delivers Another Blow to Donald Trump: 10% Tariff Ruled Illegal

The court explicitly stated that the law invoked to implement this decision was not applied correctly.

The United States Court of International Trade has dealt another setback to President Donald Trump's administration by striking down a 10% global import tariff, labelling it illegal. The court explicitly stated that the law invoked to implement this decision was not applied correctly. This is not the first instance where the court has ruled against the President's initiatives.

Background of the Case

On 24 February, the Trump administration imposed an additional 10% import duty on various goods entering the US from across the globe. The government claimed this move would help control the country's rising trade deficit.

However, 24 US states and several small businesses challenged the decision in court. The petitioners alleged that the administration was misusing old trade laws to bypass previous Supreme Court objections regarding earlier tariffs.

The Court's Ruling

The court delivered a 2-1 majority verdict, clarifying the following points regarding the legal framework:

• Section 122 of the Trade Act of 1974: The court noted that this provision can only be utilised under extraordinary circumstances.
• Specific Criteria: It applies only if the US faces a severe balance-of-payments crisis or if it is essential to prevent a sharp decline in the value of the dollar.
• Lack of Justification: The court found that current conditions did not warrant the use of this law, concluding that the tariffs lacked a solid legal basis.

Directives to the Government

The court has ordered the government to comply with the ruling within five days. Furthermore, authorities must initiate the process of refunding the additional taxes collected from importers.

During the proceedings, the government argued that the US trade deficit had reached $1.2 trillion and that the current account deficit was nearly 4% of GDP. However, several economists testified that the US is not currently undergoing an economic emergency or a payments crisis. It is expected that the US Department of Justice may challenge this ruling in a higher court.

In a minor reprieve for the administration, tariffs already in place on steel, aluminium, and the automobile sector will remain active, as they fall outside the scope of this specific legal challenge.