| Dear valued professional, On May 7, the U.S. Court of International Trade (CIT) ruled, in a 2-1 decision, that the Section 122 tariffs are unlawful. The majority held that, even accepting the President’s proclamation imposing the tariffs as true, the President failed to identify a “balance‑of‑payments deficit” as required under Section 122 of the Trade Act of 1974. Instead, the proclamation cited a large trade deficit, a current account deficit, a negative net international investment position, and deficits in primary and secondary income. The Court found that none of these measures constitutes a balance‑of‑payments deficit within the meaning of Section122. The Court declined to issue a universal injunction prohibiting application of the Section 122 tariffs nationwide. Judge Timothy Stanceu dissented. He argued that the Court should not have concluded that the President failed to address balance‑of‑payments concerns simply because the proclamation relied on indicators such as trade deficits and the current account deficit. According to Judge Stanceu, the proclamation relied on Bureau of Economic Analysis statistics sufficient to support a finding that the balance‑of‑payments deficit was “large and serious” within the meaning of Section 122. Judge Stanceu also raised procedural concerns, stating that summary judgment was inappropriate without first providing the government an opportunity to contest the plaintiffs’ factual assertions. The government is expected to promptly appeal the decision and to seek a stay of the ruling pending appeal. |
