Earlier today, a three-judge panel of the US Court of International Trade (CIT) heard oral arguments in two cases challenging Donald Trump's massive new Section 122 tariffs - one filed by the Liberty Justice Center (LJC) on behalf of two small businesses harmed by the tariffs, and another filed by 24 state governments. After Trump's previous International Emergency Economic Powers Act tariffs were invalidated by the Supreme Court, in a case I helped litigate, along with LJC, Trump tried to use Section 122 of the 1974 Trade Act to impose sweeping 10% tariffs on almost all imports (administration officials say they will raise them to 15%).
Section 122 only permits tariffs for up to 150 days in response to "fundamental international payments problems" that cause "large and serious United States balance-of-payments deficits" or "an imminent and significant depreciation of the dollar," or create a need to cooperate with other countries in addressing an "international balance-of-payments disequilibrium." As explained in an amicus brief I filed on behalf of the Cato Institute and myself, and another filed by numerous prominent economists from across the political spectrum, these problems can only occur in a fixed-exchange rate regime of the kind that existed prior to the collapse of the Bretton Woods system in 1973.
