According to Jeffrey Schwab, one of the main lawyers of the LJC, the 1974 law was “voted to respond to a specific historic crisis during which gold and currency reserves were exhausted”. “The United States has a trade deficit, not a current account deficit or international payment issues. The president cannot impose these tariffs,” he added. This is a new setback for the American president, who has made customs duties a central part of his economic policy since his return to the White House in early 2025 and threatens to impose new ones.
The legal consequences of the decision
According to the decision made on Thursday by two judges against one, the 10% surcharge is not in line with the law. Consequently, the three companies that had taken the matter to court should no longer be subject to such an additional charge. The court also orders the U.S. government to reimburse them, with interest, for the unfairly collected customs duties over the past two months. While the judgment, subject to appeal, is currently limited to these three plaintiffs, it sets a legal precedent allowing other companies to also challenge the surcharges.
At the end of February, the US Supreme Court had overturned a large portion of the customs duties wanted by the American president, arguing that he had made an unconstitutional interpretation of a law to justify them. Donald Trump had also revoked this new 10% surcharge. However, the 1974 law only applies if a significant imbalance in the current account balance is demonstrated. The current account balance includes all financial transactions between two countries, including trade, financial flows, and cross-border investments. However, this 1974 law only allows for a maximum duration of six months for customs duties, which can then only be extended after Congress has approved it.
The legal framework for trade measures
The US government justified this choice by wanting 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 trade investigations, under a provision also from the 1974 law, which allows for up to 100% tariffs in case of national or economic security risks to the United States. This same provision was used to impose sectoral customs duties, particularly targeting automobiles, steel and aluminum, or copper, which were not affected by the Supreme Court’s decision.
