The U.S. Court of International Trade has ruled that President Donald Trump illegally imposed a temporary 10% global tariff under Section 122 of the Trade Act of 1974. The May 7 ruling applied only to three plaintiffs challenging Trump's authority, but trade lawyers are now advising other importers to file similar lawsuits to halt tariff payments and secure their rights to potential refunds. Alexander Schaefer, partner at Crowell & Moring, notes the court is quietly signaling that "if you want help, you have to come and get it."
U.S. Trade Representative Jamieson Greer has indicated the administration will appeal the ruling, and lawyers expect the government to request continued tariff collection during the appeal process. However, Brittney Powell of Fox Rothschild argues this possibility should not deter importers from filing lawsuits. The Supreme Court's rejection of Trump's attempt to use the International Emergency Economic Powers Act (IEEPA) for global tariffs could work in importers' favor in the current case, she says.
Not all lawyers agree immediate action is necessary. Devin Sikes, partner at Akin Gump Strauss Hauer & Feld, points out there is a two-year statute of limitations for filing lawsuits, and the ruling could be overturned on appeal. Sikes notes that if the Court of Appeals or Supreme Court upholds the CIT's conclusion, a refund process similar to the IEEPA tariffs would likely follow, though that ultimate conclusion remains distant.
By law, the Section 122 tariffs Trump imposed in February will expire on July 24, and the administration is expected to replace them with Section 301 tariffs under the Trade Act of 1974, which allows tariffs in response to unfair trade practices. Despite being temporary, a significant amount of money will be collected from importers over the 150-day period the Section 122 tariffs remain in place. Schaefer explains that many importers will be asking themselves and their advisors how to preserve their rights so that if the ruling holds up through the appeal process, they can recoup the duties paid since mid-February.
Powell emphasizes the high likelihood of success on the merits, stating "there's a track record now of using these tools to obtain tariffs, and they're not lawful." While the court's ruling did not prevent the Trump administration from collecting tariffs nationwide, lawyers confirm there is nothing to stop importers from filing complaints and requesting injunctions to obtain the same relief granted to the plaintiffs in this case.
Key Takeaways:
1. The U.S. Court of International Trade ruled Trump's 10% global tariff under Section 122 illegal, with the decision applying to three plaintiffs.
2. Trade lawyers advise importers to file lawsuits to preserve their rights to potential refunds if the ruling survives appeal.
3. The Trump administration will appeal the ruling and is expected to request continued tariff collection during the appeal process.
4. Section 122 tariffs expire on July 24 and are expected to be replaced with Section 301 tariffs under the Trade Act of 1974.
5. A significant amount will be collected from importers during the 150-day period, and there is a two-year statute of limitations for filing lawsuits.
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