More than 20 Democratic-controlled states, including New York, Oregon and California, filed a lawsuit on Thursday, March 5, with the United States Court of International Trade (CIT), challenging the legality of the new 10% tariff imposed by the White House under a 1974 law. The move follows the Trump administration’s resounding defeat on February 20, When the Supreme Court struck down most of its global duties.

New "unlawful" tariffs

In their lawsuit, attorneys general from New York, California, Oregon and other states argued that Trump had "once again exercised tariff authority that he does not have" in rolling out a 10-percent levy after his earlier duties were ruled illegal.

"Because these tariffs are unlawful, this court should declare that they are not in force" and order that refunds be made, the group of 24 states said in its filing to the CIT.

The new tariffs last only for 150 days, unless they are extended by Congress, but he has already threatened to raise the rate to 15 percent and his administration is pursuing more lasting action. For now, the group of 24 states charged that Section 122 of the Trade Act of 1974 did not authorize Trump’s "immense and ever-changing" duties.

“Trump keeps throwing out illegal, reckless policies, hoping something sticks, while everyday Americans pay the price,” California Governor Gavin Newsom said in a statement.

In any case, for international trade operators, this new legal battle marks the beginning of another phase of uncertainty.

Postponed refunds

The Supreme Court’s February 20 ruling invalidating most of the customs duties imposed under the 1977 International Emergency Economic Powers Act (IEEPA) has opened the door to a rush for refunds as importers try to get back lost revenues.

On Wednesday, March 4, a CIT judge ordered the Customs and Border Protection (CBP) agency to stop calculating and collecting these duties. However, on Friday, March 6, the CIT granted the agency a delay in starting the refunds.

Indeed, the CBP lacks capability to handle the "unprecedented volume" of cases. "Its existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency’s trade enforcement mission," its executive director of trade programs Brandon Lord said.

The CBP aims to have a suitable system ready for use in 45 days, its executive director of trade programs Lord highlighted in a filing.

Lord noted that more than 330,000 importers had made over 53 million entries where they deposited or paid duties that have since been struck down.

The tariffs now ruled illegal had generated more than USD 166 billion (around EUR 144 billion) of revenues for the US government.