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No sooner does one tariff legal issue leave the headlines, than another comes hurtling in – some two dozen US states have filed lawsuits against the Trump administration’s effort to re-implement its tariff policy under a different name.
Following that crippling Supreme Court decision against the legality of the president’s IEEPA (International Emergency Economic Powers Act) tariffs, the administration very quickly invoked section 122 of the 1974 Trade Act to hit all US imports with a 10% levy.
The 22 states filed a suit with the US Court of International Trade (CIT) stating: “The same day the Supreme Court invalidated his IEEPA tariffs, the president began to sidestep its ruling by imposing a 10% tariff on most products worldwide.
“Contrary to the purpose and limited delegation of Section 122, President Trump has invoked this statute to impose immense and ever-changing tariffs on whatever goods entering the United States he chooses, and for whatever reasons he finds convenient.
“As with his unlawful use of IEEPA, the president once again exercised tariff authority that he does not have – involving a statute that does not authorise the tariffs he has imposed – to upend the constitutional order and bring chaos to the global economy.”
As such, the states called on the court to declare the proclamation by which President Trump imposed the tariffs a “violation of the separation of powers”, with US law providing only Congress power to introduce tariffs and to refund any 122 tariffs already paid.
Worryingly for the administration, while 17 of the 22 states that filed are Democrat held, Republican states Arizona, Michigan, Nevada, North Carolina, and Wisconsin all added their names, as did the Democrat governors of Republican Kentucky and Pennsylvania.
And it was filed on the same day the CIT ordered Customs to liquidate affected entries without the tariffs, and reliquidate those not yet final, effectively forcing forward the process that will see billions in illegally collected IEEPA tariffs refunded.
Pete Mento, director of global trade advisory services at Baker Tilly, said the argument put forward by the states was both “pretty straightforward and not exactly subtle”, and noted the justification, a so-called balance of payments crisis, “simply doesn’t exist”.
Indeed, while the act itself was written to address “balance of payments” issues, such concerns were rendered redundant when the country moved from a fixed rate of currency exchange to the floating currency exchange rate mechanism.
Mr Mento noted the states “claim it is just another way for the White House to impose, tweak, and re-impose tariffs whenever the mood strikes – whether that’s through executive orders, policy memos, or the occasional late-night social media post”.
“They also took a swipe at the giant carve-out list. Apparently, there are about 80 pages of products that somehow escaped the tariffs, along with special treatment for certain countries (I admit, I haven’t gone through this yet),” he added.
As the lawsuit claims, the act requires tariffs “be applied consistently with the principle of non-discriminatory treatment”, adding that subject to narrow exceptions, they must be “of broad and uniform application with respect to product coverage” too.
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