On May 7, the U.S. Court of International Trade (CIT) invalidated the Donald Trump administration\u2019s 10 percent across-the-board tariffs imposed under Section 122 of the Trade Act of 1974. The ruling generated a sense of d\u00e9j\u00e0 vu, as the same court had ruled against tariffs under the International Emergency Economic Powers Act (IEEPA) just a year earlier.\u00a0<\/p>\n
Section 122 empowers a U.S. president to impose a temporary surcharge, not to exceed 15 percent ad valorem, in the form of duties when \u201cfundamental international payment problems exist.\u201d The administration, which pivoted to Section 122 immediately after the Supreme Court\u00a0voided IEEPA tariffs<\/a>\u00a0in February, argued that the current account deficit and the goods trade deficit contributed to the problem. This interpretation appeared to rest on\u00a0shaky legal ground<\/a>, which the CIT confirmed when it found that these deficits did not qualify as \u201cbalance-of-payments deficits\u201d within the meaning Congress intended when it enacted the statute in 1974.\u00a0<\/p>\n The ruling\u00a0applied the brakes<\/a>\u00a0to Section 122, but it did not bring tariffs to a complete halt. The court declined to issue a universal injunction, granting limited relief only to the two private plaintiffs and the state of Washington. Section 122 tariffs will likely keep rolling until they expire on July 24, unless another tariff vehicle, such as Section 301, starts its engine first.\u00a0\u00a0<\/p>\n What Happens Next<\/p>\n As expected, the Department of Justice\u00a0filed a notice of appeal<\/a>\u00a0on May 8, asking the\u00a0U.S. Court of Appeals for the Federal Circuit\u00a0<\/a>to overturn the CIT\u2019s decision and uphold the Section 122 tariffs. In the most recent development, the court put the CIT ruling against the Section 122 tariffs on pause for ten days to allow for comments and review. Based on the earlier litigation timeline involving the IEEPA tariffs, the Federal Circuit is likely to issue a ruling after Section 122 measures expire. But the legal battle is set to continue beyond the life of the tariffs themselves, as both plaintiffs and non-party importers\u00a0are expected to pursue refunds<\/a>\u00a0for duties already paid.<\/p>\n Meanwhile, Section 301 appears to be positioned as the next alternative tariff vehicle. The Office of the United States Trade Representative (USTR) may choose to accelerate two ongoing Section 301 investigations\u2014one focused on structural excess capacity and the other on forced labor\u2014in light of the CIT ruling, as shifting to Section 301 would likely present a more legally durable path and reduce the risk of further successful challenges. With the clock ticking toward the expiration of the Section 122 tariffs, USTR is expected to move quickly to ensure that all procedural and substantive requirements for imposing Section 301 tariffs are fully satisfied.<\/p>\n One Big Question Mark<\/p>\n At present, thousands of importers are asking a key practical question: whether they need to file their own lawsuits to secure tariff refunds. Even with a broad injunction against IEEPA tariffs, many importers still chose to file individual claims out of concern that they might otherwise miss the opportunity to recover what they had paid.\u00a0<\/p>\n It remains unclear whether all affected importers will automatically qualify for refunds or whether they will need to file separate actions to preserve their rights. The CIT\u2019s ruling on Section 122 is welcome news for importers, but significant uncertainty and unanswered questions are likely to linger for some time.<\/p>\n Hyun Jung \u201cJessie\u201d Je is Senior Fellow and Director for External Engagement at the Korea Economic Institute (KEI). The views expressed here are the author\u2019s alone.<\/p>\n This material is distributed by KEI on behalf of the Korea Institute for International Economic Policy. Additional information is available at the Department of Justice, Washington, DC.<\/p>\n","protected":false},"excerpt":{"rendered":"On May 7, the U.S. Court of International Trade (CIT) invalidated the Donald Trump administration\u2019s 10 percent across-the-board…\n","protected":false},"author":2,"featured_media":15838,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[31,327,2594],"class_list":{"0":"post-15837","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-korea","8":"tag-korea","9":"tag-tariffs","10":"tag-trade"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/15837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=15837"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/15837\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/15838"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=15837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=15837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=15837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}