Tariffs face uncertainty after First Circuit ruling
On Aug. 29, the U.S. Court of Appeals for the First Circuit determined that President Trump exceeded his authority by imposing the April 2 reciprocal tariffs. The president relied on the 1977 International Emergency Economic Powers Act (IEEPA).
These tariffs would impact 69% of U.S. goods imports, including those to Puerto Rico. If they were eliminated, the tariff impact would be reduced to 16%. For now, the appeals court has kept the tariffs in place until Oct. 14, giving the president time to appeal.
The decision affects the “reciprocal tariffs” of April 2, as well as the tariffs previously imposed on China, Canada and Mexico. The appeals court determined that the IEEPA does not grant the president the authority to implement tariffs, as that power resides exclusively in Congress.
The decision puts these tariffs, which began after several delays in early August, in an uncertain future. The decision also extends to the tariffs imposed on China, Canada and Mexico.
Part of President Trump’s tariff package will remain outside the court’s ruling. Thus, tariffs targeting specific sectors (known as Tariff 232 — Section 232 tariffs under the Trade Expansion Act), such as taxes on imported steel, aluminum and copper, remain in place, as they are not part of the litigation. The elimination of the “de minimis” exemption, which went into effect last Friday, also remains in place.
Which ones are impacted? As mentioned above, the April 2 “reciprocal tariffs” and the tariffs imposed on China, Canada and Mexico after April 2. This includes the new tariffs on Brazil and India. In total, tariffs imposed on imports from more than 60 countries are affected.
For Puerto Rico, as for the rest of the United States, the situation remains unchanged (with the exception mentioned above), apart from the creation of a new state of uncertainty. It remains to be seen whether the Supreme Court will uphold the decision.
If so, some analysts believe the president could then invoke the Trade Act of 1974, but that law establishes a tariff cap of 15%, and only temporarily, unless Congress extends it. If it remains in place, the Federal Treasury would have to reimburse what was paid.
Graham Castillo is president of Estudios Técnicos Inc.
