Federal Court Allows 10% Tariff to Continue Amid Legal Disputes

The U.S. government will persist in collecting a 10% worldwide tariff imposed in February, pending legal challenges, as per a ruling by a federal court on Thursday. The Court of Appeals for the Federal Circuit in Washington delivered a procedural victory to the Trump administration. It determined that the administration’s case was “likely to succeed on the merits.”

The tariffs in question were introduced by President Donald Trump, following the Supreme Court’s decision in February to nullify broader tariffs he had enacted the previous year on nearly every country. Implemented under Section 122 of the Trade Act of 1974, these tariffs are slated to end on July 24.

Not previously used to justify import taxes, Section 122 permits the president to impose worldwide tariffs of up to 15% for 150 days. After this period, congressional approval is necessary to extend them. The section addresses “fundamental international payments problems.” A central issue is whether this term encompasses trade deficits, defined as the gap between U.S. exports and imports, as claimed by the Trump administration.

A split decision by a three-judge panel of the Court of International Trade in New York recently deemed the 10% tariffs illegal. Small businesses had taken legal action to halt these tariffs. The trade court’s ruling, by a 2-1 margin, concluded that President Trump exceeded the powers granted by Congress under the law. According to the majority, the tariffs are “invalid” and “unauthorized by law.”

The controversy surrounding these tariffs may eventually reach the Supreme Court for resolution.