US Court of International Trade hears arguments on Trump’s tariffs

On April 10, a three-judge panel — Chief Judge Mark Barnett and Judges Claire Kelly and Timothy Stanceu — heard arguments in the latest development of the Trump tariff saga from both Trump administration lawyers and lawyers representing the multi-state lawsuit led by Oregon, which Jeff Jackson, North Carolina’s Attorney General, signed onto in March. 

The lawsuit challenges Trump’s 10% import tariff on most goods. The crux of the issue is a disagreement over the interpretation of Section 122 of the 1974 Federal Trade Act.

Lawyers for the plaintiffs Brian Marshall and Jeffrey Schwab argued that Trump’s interpretation of Section 122 is too broad. Trump’s position, according to the lawyers, is that the current account deficit is being equated with the balance of payments deficit. If that were true, according to the lawyers, it shouldn’t only apply to one component of the current account but to any component.  

Lawyers argued that if it applies to any component, “then that makes it a really strange situation” because it’ll apply indefinitely to one of the components. The plaintiff attorneys argued that the president’s interpretation is too broad, because if the president has to act because the statute says shall, “then it’s very strange that the president hasn’t ever acted or at least given any kind of indication to Congress that it wasn’t going to act because it wasn’t in the national interest.”

Another illustration by the plaintiffs’ lawyers of the “absurdity” of Trump’s position is that there was a current account surplus but a capital account deficit, in which case the statute would allow the president to impose tariffs to address a capital account deficit. According to the lawyers for the plaintiffs, this is the exact opposite thing that you would want to do in that situation. 

“It’s a massive amount of power that Congress is supposedly giving the president from this term that we’ve discussed for three hours, and nobody seems to come to a consensus on what it means,” said lawyers for the plaintiffs. “So the Supreme Court has indicated that the Major Questions Doctrine might be useful in this in this circumstance. Because here we have a massive amount of power supposedly given to the president that obviously implicates vast economic and political significance, and in a situation where we have an old statute that’s never been used in this way before by any president and that has been interpreted in a way that’s different from how it has ever been interpreted before.” 

According to the plaintiffs’ lawyers, the Major Questions Doctrine would require a clear statement from Congress here. Lawyers for the plaintiffs asserted that the conclusion that could be drawn from the three-hour-long hearing is that the president can’t simply use Section 122 for any component of a balance of payments deficit, which reveals that the court did rely at least in part on the Major Questions Doctrine.

Trump administration lawyers argued that Congress aimed to give the president the power through special import measures, and that the motivating factor for these powers was the Nixon factor, described as the trade deficit contributing to a balance-of-payments problem. According to Trump administration lawyers, that’s what the president identified here as well, and the trade imbalance is contributing to that balance-of-payments problem. Lawyers argue that the statute could have been written more narrowly to constrain the president’s discretion, arguing that the statute could only be used in a fixed currency regime, which the United States no longer operates on since Nixon’s abolishment of the gold standard. A more narrowly written statute would have placed limits on Section 122, specifying how to calculate the balance of payments. However, according to Trump’s lawyers, Congress and economists agree. 

Trump’s lawyers pushed back on the plaintiff’s argument that there is a precondition to invoke the statute. The administration argues that the phrase “fundamental international payments problem” is a generic catch-all. Based on subsection A of the statute, the administration argues that, based on a comprehensive interpretation of the statute, the state’s argument for a precondition is incorrect. 

While no timeframe was given for a ruling, the same court issued a ruling within two weeks of hearing arguments in the IEEPA tariffs case.  

“US Court of International Trade hears arguments on Trump’s tariffs” was originally published on www.carolinajournal.com.