No leniency for new Trump tariffs

OPINION:

It has been a year since “Liberation Day,” when President Trump unilaterally imposed worldwide tariffs.

Now, more than a month since the Supreme Court struck down those tariffs, American taxpayers are still awaiting refunds. Yet before the dust had even settled from the court’s decision, the administration announced new, legally dubious tariffs.

Relying on the government’s promise of repayment with interest and in a manner that would not cause irreparable harm, courts allowed the administration to continue collecting its Liberation Day tariffs as the cases against them proceeded.

Courts should not extend that leniency to these new tariffs.

On Feb. 20, the Supreme Court issued its decision in Learning Resources v. Trump, finding that the International Emergency Economic Powers Act does not grant the president the power to impose tariffs.

During the case, Secretary of Commerce Howard Lutnick “declare[d] under penalty of perjury” to the U.S. Court of Appeals for the Federal Circuit that “[w]ithout the viability of IEEPA tariffs, the United States would be weakened and would lose the essential tool to address” the supposed national emergency.

The administration told the court that tariffs depended on the International Emergency Economic Powers Act.

Further, the administration assured the courts that Americans would not suffer irreparable harm from the tariffs. The administration said that, if the tariffs were ultimately struck down, it would issue refunds with interest.

In light of that promise, the courts allowed the government to continue collecting tariff revenue for a year while the case proceeded.

Within hours of the court’s announcement of its decision in Learning Resources, Mr. Trump announced another round of illegal tariffs. Specifically, the administration announced a 10% global tariff under Section 122 of the Trade Act of 1974, which was designed to address “balance of payments deficits.”

Though the administration equates “balance of payments deficits” with “trade deficits,” the two are not the same. A “balance of payments deficit” is a natural consequence of the fixed exchange rate system, which was officially abandoned in 1976, though the system had collapsed in practice even earlier.

As outlined in National Review and a recent Advancing American Freedom amicus brief, Section 122 has never been used to levy tariffs because it was obsolete from the moment it became law.

Perhaps since Section 122 allows tariffs to be effective for only 150 days, the administration does not even need a robust defense.

Because court proceedings take time, the government could easily use its Section 122 tariffs as a stopgap while completing the requirements to institute tariffs under the next statute on its list, Section 301 of the Trade Act of 1974.

The government’s reasoning for the Section 301 tariffs is not much better than its reasoning for Section 122. The administration attempts to justify its Section 301 tariff investigation by noting that other countries have “untethered” their ability to produce goods “from the incentives of global supply and demand.”

Though central planners have sought to elude these economic laws for centuries without success, the administration claims other countries have done so and are harming the U.S. by selling their surplus goods in our markets.

Contrary to the administration’s claims in court, Americans have suffered irreparably from the illegal tariffs. Even if the tariff refunds (with interest) were issued tomorrow, they would do little to make whole the businesses that have been forced to close or the Americans who have been laid off because of rising costs.

Unsure of how long the government will take to process these refunds, some small companies that cannot afford to wait have even sold the rights to their refund claims for as little as 30 cents on the dollar.

Relying on the government’s promises of repayment, the courts allowed the administration to continue collecting its International Emergency Economic Powers Act tariffs to disastrous effect.

If, while they consider Mr. Trump’s Section 122 tariffs, the courts allow the administration to again collect tariffs, the government could again use illegal policies and certain-to-be-broken repayment promises to advance its agenda at the expense of Americans and American businesses.

If the United States is to remain an attractive home for global investment, it must return stability and predictability to its markets. The courts could help us move in that direction by pausing the collection of the Section 122 tariffs until the case challenging them concludes.

Fool me once …

• Marc Wheat is the general counsel at Advancing American Freedom Foundation.