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New Delhi. US President Donald Trump’s tariff policy has suffered a major setback. The US Federal Trade Court has rejected the new global import duty imposed by the Trump Administration. The court said that the Trump Administration misused the limited powers granted under the Trade Act of 1974 and tried to impose a 10 percent import surcharge outside the law.

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Why was the Trade Act enacted?

The US Court of International Trade said in a 2-1 decision that the Trump administration cannot use Section 122 of the Trade Act of 1974 on the basis of extensive trade deficit and current account deficit. According to the court, this law was made to deal with the specific balance of payments crisis of the 1970s and not the general trade deficit of the modern era.

What did Trump fail to prove?

Judge Mark A. Barnett and Claire R. Kelly said in his decision that Trump’s announcement failed to prove that the necessary conditions through the law were met. Let us tell you that President Donald Trump had imposed these tariffs in February.

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What warning did the court give?

The Court also warned that if the President were allowed such a broad interpretation, it would give him almost unlimited power to impose tariffs. The Court said that doing so could raise constitutional questions, because the right to decide tariffs and trade policy rests primarily with Congress.

The court had rejected Trump’s old tariff

In fact, earlier this year, the US Supreme Court had also rejected Trump’s earlier tariff system, which he had implemented under the emergency powers law. After this, in February, Trump implemented new tariffs using Section 122. This provision allows the President to impose temporary import duty up to 15 percent for a maximum of 150 days.

The Trump administration had claimed that this step was necessary in view of America’s huge trade deficit. However, the court said that the balance of payments crisis mentioned in the law does not mean the current trade deficit.

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How did this matter come to light?

The case came after two importing companies, Burlap and Barrel and toy company Basic Fun, as well as Washington state, were challenged in court. The court ruled in their favor. However, petitions from some other Democratic states were rejected on technical grounds.

Judge Timothy Stansue dissented in this decision. He said that the court should not interfere in the economic decisions of the President and should not give too narrow an interpretation of the Balance of Payments.

Now this decision is likely to be challenged in the US Court of Appeals for the Federal Circuit and the matter may again reach the Supreme Court. After the Supreme Court rejected the first tariff, Trump had expressed his displeasure in the White House and said, we will keep moving forward. We will be successful in bringing more money. Trump had described Section 122 as one of the most powerful options available to him.

Political and legal debate on Trump intensifies

Meanwhile, the political and legal debate regarding the use of Trump’s executive powers has also intensified. Many critics, even some Republican leaders, have said that the constitutional authority to impose tariffs rests with Congress, not the White House. Senate Republican leader Mitch McConnell has already said it is illegal to impose tariffs through emergency powers bypassing Congress.

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