Federal Court Allows Continued Collection of 10% Tariff Amid Legal Disputes

Court Ruling on Tariffs

A federal court has ruled that the U.S. government may persist in collecting the 10% global tariff imposed in February while legal disputes regarding these tariffs are resolved. This decision from the Court of Appeals for the Federal Circuit in Washington represents a procedural victory for the Trump administration, indicating that their case is 'likely to succeed on the merits.'

The tariffs in question were introduced by President Donald Trump following a Supreme Court ruling in February that invalidated broader double-digit tariffs previously applied to nearly all countries. These new tariffs, enacted under Section 122 of the Trade Act of 1974, are scheduled to expire on July 24.

Section 122, which had not been previously utilized for imposing import taxes, permits the president to enforce worldwide tariffs of up to 15% for a duration of 150 days, after which congressional approval is necessary for any extension.

This section addresses what it describes as 'fundamental international payments problems.' The central issue is whether this terminology encompasses trade deficits, which is the difference between U.S. exports and imports, as argued by the Trump administration.

Last month, a divided three-judge panel from the specialized Court of International Trade in New York ruled that the 10% global tariffs were unlawful after small businesses challenged them. The court decided 2-1 that Trump exceeded the tariff authority granted to him by Congress under the law, declaring the tariffs 'invalid' and 'unauthorized by law.' This case may ultimately reach the Supreme Court.