Tariffs are in the news again. From Politico, Oliver Ward, Megan Messerly, and Daniel Desrochers report:
The Trump administration on Thursday finalized new double-digit tariffs on dozens of U.S. trading partners as it seeks to reconstitute sweeping duties struck down by the Supreme Court in February.
The new duties, which range from 10 to 12.5 percent, follow a five-month investigation into trading partners’ efforts to root out products made with forced labor from their supply chains and are set to take effect just as a temporary global 10 percent tariff expires.
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The duties, imposed under Section 301 of the Trade Act of 1974, will go some way to rebuilding the tariff wall felled by February’s Supreme Court decision. In the wake of that ruling, President Donald Trump imposed a 10 percent global tariff under Section 122 of the same statute. But that law only authorizes tariffs for 150 days, and the current ones are set to expire Friday.
It took a full day after the announcmenet, but these tariffs have been challenged in the Court of International Trade by plaintiffs Burlap and Barrel, Inc. and Collective Horology, LLC, represented by the Liberty Justice Center. From the complaint:
- The Section 122 tariffs are limited by statute to 150 days. The Administration used that period to conduct the Section 301 investigations at issue here and then imposed the challenged Section 301 tariffs. The sequence and structure of those measures, as well as Administration statements, show that the Section 301 Action was designed to preserve substantially the same broad tariff regime that this Court and the Supreme Court have held Congress did not authorize under IEEPA and Section 122.
- The Section 301 Action exceeds the authority Congress granted in Section 301. Section 301 is a targeted, country-specific and practice-specific remedial authority. It permits the Trade Representative to act only upon a determination that a particular act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, . . . and any responsive action must be directed to that act, policy, or practice . . . . It is not a freestanding authorization to tax substantially all imports from substantially all trading partners at rates selected to replicate the invalidated IEEPA tariff regime rather than to eliminate identified foreign practices.
- The Section 301 Action is also arbitrary and capricious: USTR failed to provide a reasoned, record-based explanation for its determinations or for its selection of near-uniform duties across 60 economies with materially different enforcement records and trade profiles.
- And if Section 301 were construed to authorize duties of this scope across substantially all imports from substantially all trading partners, at rates selected in advance and without a sufficient connection to the statutory determination and remedial purpose, that construction would constitute an unconstitutional delegation of Congress’s core Article I tariff power.
- The Court should therefore set aside and enjoin the Section 301 Action.
Here’s Peter Harrell (Georgetown) in The Volokh Conspiracy on why the tariffs fail as a matter of law:
Although the Supreme Court has never weighed in on Section 301, lower courts have, and held that USTR actions pursuant to Section 301 are subject to judicial review pursuant to the Administrative Procedure Act (APA). Simply put, USTR’s new proposed tariffs do not comport with the requirements of 301. . . .
The first statutory weakness with the new tariffs is that USTR did not show on a country-by-country basis how a foreign country failing to effectively enforce a ban on products made with forced labor burdens U.S. commerce. . . .
Moreover, USTR’s proposed tariffs also fail to comport with the statute’s requirement that tariffs be “appropriate.” . . . In a case decided last year, for example, the Court of Appeals for the Federal Circuit held that while “appropriate” is “non-specific” and gives USTR substantial discretion, the statute’s requirement that actions be “appropriate” “is anchored by the statute to a specific purpose: an appropriate discretionary action is one that can end or reverse the investigated conduct.”
Surely there is much more to come.
