According to Jeffrey Schwab, one of the main attorneys of the LJC, the 1974 law was enacted to address “a specific historical crisis during which gold and currency reserves were exhausted”. “The United States has a trade deficit, not a current account deficit, nor international payment problems. The president cannot impose these tariffs,” he added. This is a new setback for the American president who has made customs duties central to his economic policy since his return to the White House in early 2025 and threatens to impose new ones.
Legal consequences of the decision
According to the decision made on Thursday, with two judges against one, the 10% surcharge is not in line with the law. Therefore, the three companies that had taken the case to court should no longer be subject to such an additional charge. The court also orders the US government to reimburse them, with interest, for the unfairly collected customs duties over the past two months. While the judgment, subject to appeal, currently only applies to these three plaintiffs, it sets a legal precedent allowing other companies to also challenge the surcharges.
At the end of February, the American Supreme Court overturned a significant portion of the customs duties wanted by the American president, ruling that he had made an unconstitutional interpretation of a law to justify them. Donald Trump had also been forced to drop this new 10% surcharge. However, the 1974 law only applies if a marked imbalance in the current account balance is demonstrated. The current account balance encompasses all financial movements between two countries, including trade exchanges as well as financial flows or cross investments. However, this 1974 law only allows for a maximum duration of six months for tariffs, which can only be extended once the Congress has approved it.
Legal framework of trade measures
The American government justified this choice by stating its intention to take the time to use the best legal tools at its disposal to implement a long-term surcharge. It also took the opportunity to launch a series of commercial investigations, under a provision also derived from the 1974 law, which allows for up to 100% tariffs in case of risk to the national or economic security of the United States. This same provision was used to impose sectoral tariffs, targeting sectors like automobile, steel, aluminum, or copper, which were not affected by the Supreme Court’s decision.
