The president said Wednesday that he will impose a 100% tariff on computer chips, likely raising the cost of electronics, autos, household appliances and other goods deemed essential for the digital age. Trump said companies that make computer chips in the U.S. would be spared the import tax.
Former Gov. George Allen has won two rounds in a legal fight with President Donald Trump over his power to unilaterally impose tariffs on foreign imports, but he welcomes the president's push for a speedy ruling by the U.S. Supreme Court to settle a dispute that he said threatens the state and national economies.
Trump said Tuesday that he will ask the Supreme Court for an "expedited ruling" to reverse an appeals court decision that found he did not have legal authority to use emergency powers to impose tariffs on goods from U.S. trading partners without the consent of Congress.
"The case does need to go to the Supreme Court because the precedent is so huge," said Allen, who joined a legal challenge to Trump's tariff policies that has succeeded in two courts. "The uncertainty and unpredictability for business, this needs to get resolved."
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The U.S. Court of Appeals for the Federal Circuit, in a 7-4 ruling on Friday, said that Trump does not have the authority to implement most of his tariffs under the International Emergency Economic Powers Act.
Late Friday, the appeals court upheld a ruling by the U.S. Court of International Trade on May 28 that found in favor of five companies -- including a small electronics retailer in Charlottesville -- that had sued the administration over its unilateral tariff policy.
The appeals court also upheld a lower court ruling on a tariff challenge filed separately by 12 states and consolidated with the lawsuit that Charlottesville-based MicroKits LLC and four other companies filed with the trade court.
The appeals court issued a stay of its ruling until Oct. 14 to allow the Supreme Court to hear the case. It also sent back a portion of the trade court's ruling to the lower court to review the scope of any injunction against further collection of most tariffs that Trump has imposed on imported goods under emergency orders.
The court decisions don't affect tariffs that Trump has ordered separately on imports of copper, steel, automobiles and auto parts under other U.S. laws.
The appeals court ruling poses a major threat to Trump's economic policies, which rely on tariffs as a new source of revenue to supplant income taxes, a lure for manufacturers to bring their factories to the U.S., and as a form of political leverage against foreign trading partners for other goals.
"If you take away tariffs, we could end up being a third-world country," Trump told reporters at the White House, according to CNBC cable news network.
One of the lawyers challenging Trump's shifting tariff policies says the appeals court affirmed the core of the case against them.
"This is not about Republicans or Democrats," said Ilya Somin, an expert in constitutional law at George Mason University's Antonin Scalia Law School. "This is about the constitutional separation of powers and the future of the American economy, which is badly damaged by these tariffs."
Port of Virginia
The damage is starting to show at the Port of Virginia, a vital engine of the state economy, with major international ports in Hampton Roads and a barge shipping operation at Richmond Marine Terminal on the James River.
Container shipping volumes are down by 9% in the first seven months of the year compared with the previous year. Imports of goods from other countries have declined 7.5%, and exports of goods from Virginia have dropped 9%, year over year. Container shipping was down 3% in August, compared with a year earlier.
"Right now, our volumes are still declining," port spokesman Joe Harris said Tuesday. "I'd say they're softening, and we attribute that to the tariff environment."
Bob McNab, chairman of economics at Old Dominion University in Norfolk, said the decline in the economic value of shipping through the port is even steeper, based on statistics from the U.S. Census.
"From the perspective of the value of goods, what is coming in and going out is down between 10 and 20 percent," McNab said. "We know that tariffs have had an impact on traffic through the Port of Virginia."
The tariffs, which range from 10% to 50%, depending on the country, also are affecting other parts of the state's economy, he said. Pressure on prices is rising. Employment is declining. Unemployment has risen in seven consecutive months, partly because of Trump's cuts to the federal workforce and spending that disproportionately affect Virginia.
"The Virginia economy is indeed slowing," McNab said.
He called Trump's tariffs "a tax American businesses and consumers, levied at the port of entry."
If the Supreme Court allows them to stand, "this will represent one of the largest tax increases on American businesses and consumers over the past 50 years," McNab said.
Allen, a Republican who served as governor from 1994 to 1998 and a U.S. senator from 2001 to 2007, said the increase in consumer prices has been offset partly by Trump policies on energy that he said have lowered gasoline prices at the pump and natural gas costs for factories.
But he said, "The main goal here is to uphold the law and the U.S. Constitution."
Allen, in a series of emails after the appeals court decision, said Trump has the option of refashioning his trade deals into binding agreements or treaties, subject to ratification by the U.S. Senate. Or, he said, "Congress could vote to enact this massive tax increase."
He said the U.S. Court of International Trade, which is revisiting the case to consider remedies, "should now decide to impose a 'universal injunction' on the imposition of these unlawful import taxes/tariffs."
If the Supreme Court upholds the lower court rulings, Allen said in an interview, "Then they're going to have to figure out remedies and how those who have been unlawfully taxed will be compensated."
"I don't know what you can do for the consumer," he added.
Somin, at George Mason, said the legal team that brought the case is "very happy" with the appeals court decision, as it was with the trade court's earlier ruling.
"As to what will happen with the Supreme Court, we'll just have to see," he said. "We think we have a lot of good arguments as to why the tariffs are illegal."
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