A US appeals court is holding a hearing Thursday in a case that could potentially throw out most tariffs President Donald Trump has imposed since taking office in January and upend trade agreements his administration has negotiated with foreign trade partners.
The US Court of Appeals for the Federal Circuit is hearing arguments from the administration and from a group of plaintiffs, including many US states, who are challenging Trump's authority to impose tariffs by citing economic emergencies.
The US Court of International Trade, in an initial ruling on 28 May, found that Trump's emergency tariffs were unlawful, ordered the administration to rescind them within 10 calendar days and to refund the customs duties collected from US importers. The appeals court has suspended that decision until at least the hearing Thursday. No matter the outcome, the case likely will be appealed to the US Supreme Court.
Trump in a series of social media posts Thursday, before the oral argument even began, said that "Tariffs are making America GREAT & RICH Again" and wished the attorneys representing his administration "good luck in America's big case today". He added that "If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE 'DEAD,' WITH NO CHANCE OF SURVIVAL OR SUCCESS."
Trump, weeks into his second term, began imposing the tariffs at issue in the case under the International Emergency Economic Powers Act (IEEPA), starting with 25pc tariffs on imports from Canada and Mexico and a 10pc incremental tariff on China that he said were based on the threat of drug trafficking. Trump vastly expanded his use of tariffs on "Liberation Day" on 2 April on nearly every country, based on an alleged "emergency" of trade imbalances.
The court of international trade in its 28 May order agreed with the argument of US businesses and states that the use of IEEPA for imposing tariffs was unjustified. In a legal brief with the court of appeals, Oregon and other states said that IEEPA only allowed temporary use of tariffs in case of an "unusual and extraordinary" threat to the US.
The administration told the appeals court that the persistent US trade deficits constituted such a threat. The administration argued that Congress indirectly is agreeing with Trump's approach because it has not taken action to curb his tariffs since he began to implement them. The administration further argued that trade deals negotiated by Trump in recent months justify the use of emergency tariffs.
The state of tariffs
Nearly every trade partner has faced a 10pc tariff since 5 April. A trade deal with the UK will maintain that rate after 1 August. Trump unilaterally set tariffs on imports from Brazil to 50pc effective 6 August.
The US is assessing a 30pc broad tariff on imports from China, in addition to baseline tariffs in existence before January. China is charging a broad 10pc tariff on imports from the US, and an extra 10-15pc on energy and agricultural commodities, in addition to tariffs assessed as of January. Broad tariff rates imposed by the US and China were slated to increase by 24 percentage points unless a deal is agreed to by 10 August, even though the deadline likely will be extended.
The scheduled date for implementing higher tariffs on imports from every other country is 1 August.
Trade deals negotiated — but not formalized — in the past month would raise the tariff rate with the EU, Japan and South Korea to 15pc beginning on 1 August. The tariff rate is set at 19pc for Indonesia and 20pc for Vietnam.
Trump has also threatened to raise the tariff rate on imports from Canada to 35pc and from Mexico to 30pc. But his administration has signaled it would continue to exempt products covered by the US-Mexico-Canada free trade agreement from tariffs.
Energy commodities are also exempted from Trump's emergency tariffs.
Trump has taken a different legal route to impose tariffs on imports of steel, aluminum, cars and auto parts. The appeals court case is not challenging the administration's sectoral tariffs.
