Business: Tighter Tariff Rules

For the first time in modern U.S. history, a federal court last week restricted the President's powers to adjust tariffs. The three-judge U.S. Customs Court in New York ruled 2 to i that the President cannot alter the recommendations of the U.S. Tariff Commission under the "escape clause" of the Trade Agreements Act, which permits the President to adjust tariffs or impose quotas to help U.S. industries that can prove they are being damaged by imports.

The ruling was handed down in the case of bicycle tariffs. In March 1955 the Tariff Commission recommended an increase in duties on large-wheel, lightweight bicycles from 7^% of value to 22^% of value. The President boosted duties to only ni% of value. He erred, ruled the court: "If the President does not accept the findings of the commission, he should reject them, not compromise them."

The decision would invalidate the President's approval of tariff boosts for spring clothespins and clover seed—both milder increases than those suggested by the Tariff Commission. It would also overturn the imposition of import quotas on lead and zinc (TIME, Oct. 6).

The U.S. is expected to appeal the ruling. If it stands, it will cost the U.S. millions in refunds to importers. More important, it may well put added pressure on the President to approve the often high Tariff Commission recommendations rather than give no relief at all.