US trade court weighs legality of Trump 10% global tariff

By Dietrich Knauth

NEW YORK, April 10 (Reuters) – A U.S. trade court on Friday considered the legality of a 10% global import tax imposed by the Trump administration, which several states and small businesses say sidesteps a U.S. Supreme Court ruling that invalidated most of Trump’s previous tariffs.

A group of 24 mostly Democratic-led states and two small businesses sued the Trump administration to stop the new tariffs, which went into effect on February 24.

The hearing is before a three-judge panel of the U.S. Court of International Trade.

Oregon’s lawyer Brian Marshall told the judges that the latest tariffs are based on archaic authority that was meant to protect the U.S. dollar from sudden depreciation in the 1970s, when dollars could be exchanged for gold reserves held in Fort Knox.

Marshall said that authority was meant to resolve significant “balance of payments deficits,” and Trump cannot repurpose it to address routine trade deficits.

“They have a different meaning of what ‘balance of payments deficits’ means,” Marshall said at the court hearing.

Trump has made ​tariffs a central pillar of his foreign policy in his second term, claiming sweeping authority to issue tariffs without input from Congress.

The administration has said that global tariffs are a legal and appropriate response to a persistent trade deficit caused by the fact that the U.S. imports more goods than it exports.

Trump imposed the new tariffs under Section 122 of the Trade ​Act of 1974, which authorizes duties of up to 15% for up to 150 days on imports during “large and serious United States balance-of-payments deficits” or to prevent imminent depreciation of the dollar. 

The states and small businesses argue that the Trade Act’s tariff authority is meant only to address short-term monetary emergencies, and routine trade deficits do not match the economic definition of “balance-of-payments deficits.”  

Trump announced the new tariffs on February 20, the same day the Supreme Court handed him a stinging defeat when ⁠it struck down a broad swath of tariffs he had imposed under the International Emergency Economic Powers Act (IEEPA), ruling that the law did not give him the power he claimed.

No U.S. president before Trump had used the IEEPA or Section 122 to impose tariffs. The two lawsuits do not challenge other Trump tariffs made under more traditional legal authority, such as recent tariffs on steel, aluminum and copper imports.

(Reporting by Dietrich Knauth; Editing by Noeleen Walder, Lisa Shumaker and Franklin Paul)