Trade court outlaws a second round of Trump tariffs

A specialty trade court has struck down a second round of tariffs imposed by the Trump administration. Joe Raedle/Getty Images North America

Joe Raedle/Getty Images North America

In a victory for importers and a setback for the Trump Administration, the Court of International Trade struck down a second round of worldwide tariffs that the president ordered to replace import levies that were outlawed by the U.S. Supreme Court.

The magnitude of the decision remains unclear, as it was initially limited to a pair of importers who challenged the tariffs, as well as the state of Washington.

"That's a very good question and one we've sort of been wrestling with," said Jeffrey Schwab who represented the importers on behalf of the Liberty Justice Center. "It's not entirely clear and probably will depend on what happens now."

After the Supreme Court ruled that President Trump had exceeded his authority in ordering double-digit tariffs on virtually everything the U.S. imports, Trump sought to replace the import taxes using a different law. But that law only authorizes tariffs in response to large and persistent balance-of-payments deficits. The trade court ruled that condition does not currently exist, so the replacement tariffs are not warranted.

A balance of payments deficit is distinct from a trade deficit, something the administration itself acknowledged earlier in court.

The new tariffs were time-limited in any case, and set to expire in July. The administration continues to explore other options to impose tariffs using different statutes.

The initial, emergency tariffs cost importers tens of billions of dollars, which the government now has to refund. The first of an estimated $166 billion in tariff refunds are expected to be paid next week.

Jay Foreman, whose Basic Fun company imports toys such as Lincoln Logs and Tonka Trucks, expects to collect some $7 million in refunds for the earlier tariffs. His company is one of the two that successfully challenged the replacement levies.

"The administration can take its shot and do what they want, but we can also fight back," Foreman said. "We fought back today and we won and we're extremely excited."