All import duties that President Trump has imposed on many dozens of countries in recent months are unconstitutional. That is the conclusion of an American federal court. But that ruling has no consequences for the time being, because the White House immediately appealed.
Since his self-proclaimed ‘Liberation Day’ at the beginning of April, Trump imposed import duties of dozens of percent on countries that sell more to the US than they purchase. The introduction of that extra tax turned out to be the start of a trade war, as some of the countries retaliated by imposing duties on the US themselves. Later, Trump decided to postpone or adjust his trade tariffs for many countries (and also the European Union).
But adjusted or not: it is not up to Trump to impose such duties, the three-member trade court ruled on Wednesday to Thursday night (Dutch time). Only the American Congress is allowed to do that. Trump bypassed that Congress and imposed the duties on his own because that was necessary for “national security”, the president reasoned at the time, without providing any evidence for this. That was therefore an unconstitutional move, the judges now conclude.
“The court does not rule on the wisdom or effectiveness of the president’s use of import duties as a means of pressure. This is not permissible. Not because it is unwise or ineffective, but because federal law does not allow it,” the judgment states.
The American government immediately appealed against the ruling, because it in turn does not believe it is up to the court to interfere with the president’s choices. In a reaction, the government lawyer spoke of a “judicial coup” that has “completely gotten out of hand”.
Until a higher court and then possibly the American Supreme Court rule, nothing will change. And even after that, the consequences are still unclear. If those higher judges conclude the same, Trump would have to reverse his import duties, insofar as he had not already done so himself. But in recent months, the American president has been overruled by courts more often and he has not always listened to them.
The lawsuit was filed by a collaboration of five small American companies that import many products from abroad, including a musical instrument manufacturer from Virginia and a beverage importer in the state of New York. In addition, there are at least five other lawsuits filed against the import duties.
What exactly were those import duties again?
Although Trump introduced his import duties as a punishment for other countries, it is in principle the Americans themselves who pay for it. It is namely an extra tax on foreign goods. American companies that purchase foreign goods have had to pay at least 10 percent extra tax on this to the American government since this spring (depending on the country of origin). Companies often process these extra costs into their sales prices, as a result of which the levy in many cases ends up on the consumer’s plate.
However, the measure can make domestic alternatives attractive. For example, Trump hopes that Americans will buy fewer German cars in the future and instead opt for American models. In addition, he hopes to entice foreign companies to open a factory in the US, because their products are then exempt from duties. Experts doubt whether many companies will take that step.