Anthony Galliano, Group CEO of Cambodian Investment Management(CIM), provides an overview of the recent ruling by the US Court of Appeals, which granted a temporary stay, restoring the administration’s ability to levy tariffs using the emergency powers declared earlier this year.
Following the unanimous ruling yesterday by the U.S. Court of International Trade to block the administration’s tariffs on 90 countries and territories, the administration filed an appeal with The United States Court of Appeals for the Federal Circuit’s. An appeal in this context is a formal request for a higher court, in this case the U.S. Court of Appeals for the Federal Circuit, to review and reverse the lower court's ruling, in this case the U.S. Court of International Trade.
In the appeal filing the administration argued that the lower court misinterpreted the law. In less than 24 hours, The United States Court of Appeals for the Federal Circuit’s ruled a temporary, stay, or pause of the pause, restoring the administration’s ability to levy tariffs using the emergency powers they declared earlier this year. The appeals court also ordered that both sides provide written arguments to be filed early next month on the question of the blocking of administration’s tariffs. In summary the stay, or pause of the pause, means tariffs are currently reinstated and remain in effect during the appeals process, no refunds are being issued yet, and the initial pause is itself now paused and on hold until the court rules on the appeal. For Cambodia, the 10% baseline tariffs are reinstated and remain in effect.
So what happens next? The deadline for plaintiffs to respond to the administration's appeal is June 5th. The deadline for the administration to reply to the plaintiffs' response is June 9th. The expected period for the appeals court to make a decision on the longer-term status of the tariffs is mid-June. The plaintiffs in this case are five small businesses adversely affected by the tariffs represented by The Liberty Justice Center, a public interest law firm. Additionally, a separate lawsuit was filed by a coalition of 13 states challenging the legality of the tariffs, asserting that the president overstepped constitutional authority by using the International Emergency Economic Powers Act to impose tariffs without congressional consent.
With the tariffs pause on the pause, the administration may pursue other avenues available to them by law. Section 301 of the Trade Act of 1974 allows the U.S. to retaliate against unfair trade practices by foreign countries if another country violates trade agreements or engages in practices that burden U.S. commerce. This has been used against China during the U.S.-China trade war, with the legal justification of intellectual property theft. Section 232 of the Trade Expansion Act of 1962 allows tariffs or quotas if imports threaten U.S. national security.
The administration used it to impose tariffs on steel and aluminum imports. Finally, Section 122 of the Trade Act of 1974 allows the president to impose temporary tariffs or quotas to address balance of payments deficits. Recently the United States imposed substantial tariffs on solar panel imports from Cambodia under the authority of the U.S. Department of Commerce, utilizing two key trade enforcement mechanisms, Antidumping Duties and Countervailing Duties.
The administration is actively encouraging countries to negotiate during the pause of the pause and maintains that the this pause is an opportunity for constructive dialogue and to find solutions, especially in light of other tariff alternatives available under the law.