The Court of International Trade ruled on May 7 in a 2-1 split decision that the Section 122 tariffs are unlawful. The majority held that, accepting President Trumps’s proclamation imposing the tariffs as true, the president failed to “identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974.” Instead, the president identified “a large trade deficit, a current account deficit, a negative net international investment position, and a deficit on the balance on primary and secondary income”, none of which equates to a “balance-of-payments” deficit.
The majority did not, however, strike down the Section 122 tariffs for everyone. It refused to issue a universal injunction because the “potential for increased costs to one plaintiff is not an appropriate basis for the imposition of a universal injunction.” Instead, the majority issued a permanent injunction only as to the named plaintiffs who are importers (including the State of Washington in its capacity as an importer).
The judgment specifically directs that the government is enjoined from imposing Section 122 tariffs on the named plaintiffs within five days and orders that all Section 122 tariffs paid by the named plaintiffs be refunded with interest. Among other reasons, the majority explained that an injunction was appropriate because, “as that experience [refunding the IEEPA tariffs] shows,” “there may be significant delays from the time the imposition of tariffs are fist held unlawful before refunds are effectuated.”
Judge Stanceu dissented, arguing that the court should not have assumed that the president’s proclamation failed to consider the balance of payments simply because it relied on factors like trade deficits and the current account deficit. “In summary, we should not conclude that the absence from the Proclamation of a basic balance measurement of the payments balance, in particular, is a ground upon which to invalidate the Proclamation. Instead, the Proclamation relies on BEA statistics to support the President’s finding that the balance-of-payments deficit is, by any reasonable measure within the meaning of Section 122, large and serious”, said Judge Stanceu. He also objected to the procedure that the majority used, arguing that granting summary judgment was improper without first providing the government the opportunity to contest the plaintiffs’ factual assertions.
The government has already appealed the decision and is expected to move for a stay pending appeal.
For more information or assistance, please contact attorney Luke Mathers at (212) 549-0160 or via email. You can also contact us at messages@strtrade.com or via your usual ST&R contact.
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