The centerpiece of President Donald Trump’s economic policy—sweeping taxes on global imports—is under legal assault again.
The U.S. Court of International Trade, a specialized court in New York, is hearing oral arguments Friday in an attempt to overturn the temporary tariffs Trump turned to after the Supreme Court in February struck down his preferred choice—even bigger, even more sweeping tariffs.
In his first attempt to impose global tariffs, the president last year invoked the 1977 International Emergency Economic Powers Act (IEEPA), using the law to declare America’s longstanding trade deficit a national emergency and to impose double-digit worldwide taxes on imports to combat it. He interpreted the law broadly to justify tariffs of whatever size he wanted, whenever he wanted to impose them, on whatever country he wanted to target.
The Supreme Court struck those tariffs down on February 20, saying IEEPA did not authorize the use of tariffs to counter national emergencies.
But Trump had alternatives to IEEPA. The quickest option was Section 122 of the Trade Act of 1974, which allows the president to impose global tariffs of up to 15% for 150 days, after which congressional approval is needed to extend them. After his defeat at the Supreme Court, Trump quickly announced 10% Section 122 tariffs. He said he’d raise them to the maximum 15% but hasn’t yet done so. The tariffs are scheduled to expire July 24.
Section 122 is aimed at what it calls “fundamental international payments problems.’’ At issue is whether that wording covers trade deficits, the gap between what the U.S. sells other countries and what it buys from them.
The provision arose from the financial crises that emerged in the 1960s and 1970s when the U.S. dollar was tied to gold. Other countries were dumping dollars in exchange for gold at a set rate, risking a collapse of the U.S. currency and chaos in financial markets. But the dollar is no longer linked to gold, so critics say Section 122 is obsolete.
Awkwardly for Trump, his own Justice Department argued in a court filing last year that the president had needed to invoke IEEPA because Section 122 did “not have any obvious application’’ in fighting trade deficits, which it called “conceptually distinct’’ from payments problems.
Awkwardly for the plaintiffs challenging his use of the temporary tariffs, the trade court itself wrote last year in its own decision striking down IEEPA tariffs that Trump didn’t need them because Section 122 was available to counter trade deficits.
—By Mae Anderson and Paul Wiseman, AP business writers
AP Writer Lindsay Whitehurst contributed to this story.