Trump’s Supreme Court workaround runs into trouble with federal judges

U.S. Supreme Court Chief Justice John Roberts with Justices Sonia Sotomayor, Clarence Thomas and Brett Kavanaugh. Chip Somodevilla/Pool via REUTERS

President Donald Trump's attempt to maintain wide-ranging tariffs following his defeat by the Supreme Court is once again before federal judges, with businesses and 25 states led by Democrats challenging the administration's most recent legal reason for imposing taxes on most imports into the United States.

A three-member panel of the U.S. Court of International Trade in Manhattan considered the arguments regarding the tariffs that have been imposed under Section 301 of the Trade Act of 1974. The tariffs vary between 10 percent and 12.5 percent and apply to more than 99 percent of the goods imported into the United States, CNBC reported.

This case represents another challenge to Trump's attempt to keep his global tariff policy in place after the Supreme Court decided on February 20 that the International Emergency Economic Powers Act does not grant presidents the authority to unilaterally impose tariffs on all of the United States' trading partners.

In response to that ruling, Trump introduced a temporary 10 percent tariff on a worldwide basis under Section 122 of the Trade Act. The power was limited to 150 days. Although a federal trade court had ruled against those duties, an appeals court stayed the decision and thus permitted the tariffs to stay in effect until the 150-day period had expired.

When the tariffs expired in July, the administration resorted to Section 301. The American trade officials stated that the new duties were justified since numerous trading partners had not done enough to stop trade in goods produced using forced labor.

The people making the challenge say Section 301 requires the government to identify specific unfair trading practices and then decide on an appropriate response, rather than applying tariffs that are almost identical to those across much of the world. They claim the administration is using the issue of forced labor as a legal basis for the tariff system, which the courts have rejected.

Pratik Shah, who is an attorney for two companies that are challenging the tariffs, told the judges that the administration could not get around those statutory requirements since it wished to act quickly.

“If you're going to do it at breakneck speed and try to cover the entire globe, you still have to satisfy the statutory requirements,” Shah said.

The Justice Department does not accept that argument; the government's attorneys stated that the Office of the U.S. Trade Representative carried out inquiries into each trading partner to whom measures were applied and found that the tariffs were justified on the grounds of Section 301.

Trump linked the new approach with the tariffs which had been invalidated by the Supreme Court. During an interview with Fox News in July, he stated that the administration had discovered other legal ways of "doing the same thing."

The case in question involves lawsuits filed by four small businesses and a group of states. The three judges who are considering the dispute were appointed by Trump, Barack Obama, and Joe Biden.

The panel didn't make an immediate ruling; a written decision is expected following the hearing, which means that another key element of Trump’s tariff plan will depend on whether the courts accept the administration's most recent exercise of its presidential trade powers.

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