A federal court in New York on Thursday invalidated the international 10 percent tariffs President Donald Trump enacted after his previous tariffs were thrown out by the Supreme Court earlier this year. A 2-1 decision from the U.S. Court of International Trade found the administration couldn’t use complaints about international trade deficits and net investments in other countries to justify the tariffs of 10 percent under Section 122 of the Trade Act of 1974. Trump in February enacted the tariffs under Section 122, which allows up to 15 percent tariffs on all goods coming into the U.S. for up to 150 days, with potential extension by Congress. Judges Mark A. Barnett and Claire R. Kelly wrote the law targeted a “balance of payments” issue meant to address potential problems with the United States’ transition from a “fixed exchange” system, where dollars were exchangeable for a fixed amount of gold. Barnett and Kelly wrote that “the President’s Proclamation fails to assert that those required conditions have been satisfied.” A group of Democratic state attorneys general, along with several importers, challenged the tariffs in March. The majority Thursday found that the states did not have legal standing to sue but ruled in favor of the importers. The decision could be appealed to the U.S. Court of Appeals for the Federal Circuit, and eventually the Supreme Court. That’s the same path followed by the challenges to Trump’s prior tariffs, under the International Emergency Economic Powers Act of 1977 before a 6-3 Supreme Court majority ruled them unlawful earlier this year. In Thursday’s decision, the majority wrote that the Bureau of Economic Analysis, the primary agency for economic statistics, no longer measures balance of payments deficits as it did in the 1970s. The Trump administration argued that trade deficits in the “current account” — the measurement of all income, investments and exports to and from the country — could be used to justify the tariffs. The majority wrote that such a broad reading of the statute would give the president the ability to impose the tariffs at basically any time and “such an expansive reading of the statute would raise a non-delegation issue, which in turn would prompt a constitutional question.” The majority rejected that, finding that Congress didn’t intend for the president to substitute other measures to create new taxes. “Rather than identifying ‘balance-of-payments deficits’ as that term was intended in 1974, the Proclamation relies upon current account deficits, and a discussion of ‘a large and serious trade deficit,’” the majority wrote. Judge Timothy C. Stanceu dissented, arguing that the court should not peek behind the curtain of Trump’s decision-making. “In deciding whether the President acted within such authority, we are not empowered to review the factual findings by which he concluded the action was necessary or appropriate,” Stanceu wrote. Stanceu also argued that the majority interpreted the term “balance of payments” too narrowly. Instead, Stanceu would have allowed the president’s interpretation, based on trade deficits and disparities in investments. Stanceu also criticized the majority for issuing a summary judgement in favor of the importers, arguing that instead there should have been more court proceedings.
