Trump's 10% global tariffs ruled illegal by US trade court
What's the story
A United States trade court has ruled that President Donald Trump's 10% global tariffs are unjustified under a 1970s law. The decision, however, only blocks the tariffs for two importers and the State of Washington. The ruling by the US Court of International Trade comes as a setback for Trump's tariff strategy ahead of his trade discussions with Chinese President Xi Jinping in Beijing.
Ongoing tariffs
Tariffs expected to expire in July
The court's 2-1 decision leaves the temporary tariffs intact for other importers while any appeal by the Trump administration is pending. The tariffs are expected to expire in July. The ruling found that Trump's imposition of the tariffs under Section 122 of the Trade Act of 1974 was misguided, with one judge saying it was premature to grant victory to plaintiffs.
Legal proceedings
Court declines to issue universal injunction
The New York-based trade court declined to issue an injunction blocking the tariffs for all importers. This was after a group of 24 states, mostly led by Democrats, sought relief but were found not to have standing. The court's ruling said "Private plaintiffs make no specific arguments for a universal injunction," and costs to one plaintiff weren't sufficient grounds for imposing such an injunction.
Economic impact
Ruling viewed as victory for American companies
The court's ruling is viewed as a potential victory for American companies dependent on global manufacturing. Jay Foreman, CEO of toy company Basic Fun!, said "This ruling brings needed clarity and stability for companies navigating global supply chains,". The Trump administration had argued there was a serious balance-of-payments deficit, citing a $1.2 trillion annual goods trade deficit and a current account deficit of 4% GDP.
Economic debate
Economists skeptical about justification for tariffs
However, economists have been skeptical of the justification for these tariffs. Former IMF First Deputy Managing Director Gita Gopinath said at the time that "the US is not facing a balance-of-payments crisis." Ryan Majerus, a former senior US Commerce official, predicted that while the administration will appeal this decision, permanent Section 301 tariffs might be imposed later this year.