Washington: A US federal trade court has struck down President Donald Trump’s latest attempt to impose sweeping tariffs on imported goods, ruling that the administration went beyond the powers granted under a 1974 trade law. The decision centred on Trump’s move to introduce a 10 percent surcharge on imports entering the United States.

In a 2-1 judgment, the US Court of International Trade ruled that the administration could not justify the tariffs under Section 122 of the Trade Act of 1974 by citing broad trade and current account deficits.

The court said the law was originally intended to address specific balance-of-payments crises connected to the international monetary framework of the 1970s rather than present-day trade imbalances.

Court questions basis for tariffs

Judges Mark A Barnett and Claire R Kelly stated in the ruling that Trump’s proclamation did not establish that the legal conditions required under the statute had been met.

According to the court, the administration relied on arguments linked to current account deficits and large trade deficits instead of the narrower concept of “balance-of-payments deficits” that Congress had in mind when the legislation was enacted in 1974.

The majority opinion said: “Rather than identifying ‘balance-of-payments deficits’ as that term was intended in 1974, the Proclamation relies upon current account deficits, and a discussion of ‘a large and serious trade deficit.’”

The judges further warned that accepting such a broad reading of the law could effectively hand presidents unrestricted powers over tariffs.

“Such an expansive reading of the statute would raise a non-delegation issue, which in turn would prompt a constitutional question,” the ruling added.

Tariffs introduced after earlier Supreme Court setback

Trump introduced the tariffs in February after the Supreme Court earlier this year invalidated his previous tariff framework, which had been imposed using emergency powers legislation.

The revised tariff plan was announced under Section 122 of the Trade Act of 1974, which permits temporary import surcharges of up to 15 per cent for a period of 150 days.

Trump had promoted Section 122 as one of several “very powerful alternatives” available following the Supreme Court’s rejection of his earlier tariff measures under the International Emergency Economic Powers Act.

Speaking at the White House briefing room shortly after the earlier ruling, Trump criticised the Supreme Court while defending his tariff strategy.

“We’re going forward,” Trump had said at the time. “We will be able to take in more money.”

Court sides with importers and Washington state

The latest judgment was delivered in favour of importers Burlap and Barrel and toy manufacturer Basic Fun, along with the State of Washington. However, the court dismissed claims brought by several Democratic-led states, ruling that they lacked standing in the matter.

Judge Timothy Stanceu dissented from the majority decision. He argued that the judiciary should not narrowly interpret how balance-of-payments deficits are assessed or interfere with the President’s economic judgement.

Appeal expected amid growing scrutiny

The ruling is expected to be challenged before the US Court of Appeals for the Federal Circuit and may eventually return to the Supreme Court.

The decision comes at a time of increasing legal and political examination of Trump’s use of executive powers on trade policy. Critics, including some within the Republican Party, have argued that constitutional authority over tariffs and trade rests with Congress rather than the White House.

Senate Republican leader Mitch McConnell had earlier stated that using emergency powers “to circumvent Congress in the imposition of tariffs” was unlawful.

Agency inputs