A US appeals court has ruled that President Donald Trump’s blanket tariff policy is largely illegal, but has allowed the tariffs to remain in place while the administration appeals to the Supreme Court.
The Court of Appeals for the Federal Circuit in Washington, DC, largely upheld a decision in May that found Trump had overstepped his authority in imposing universal tariffs on all US trading partners.
The court’s decision questioned the logic behind Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) to justify the tariffs, claiming that trade deficits with other countries constituted a “national emergency.”
The court wrote that the statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, “but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.”
Trump had imposed 10% tariffs on all countries, plus individualised “reciprocal” tariffs on specific trading partners, citing the need to protect American industries and workers.
However, experts have warned that trade deficits are not necessarily a bad thing, and that tariffs can have negative consequences for the economy.
“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency,” the court wrote. “But none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.”
The court’s decision was in response to two lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five US small businesses, and the other by 12 US states.
The lawsuits argued that Trump had exceeded his presidential authority in levying blanket tariffs, and that the Constitution places the power to issue taxes, including tariffs, under Congress, not the presidency.
Despite the court’s ruling, Trump remains defiant, stating that his tariffs will remain in place despite the appeals court’s decision. “ALL TARIFFS ARE STILL IN EFFECT! Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end,” he wrote on his social media platform Truth Social.
Trump also implied that he expected the Supreme Court to back him up in his appeal, stating that tariffs “are the best tool to help our Workers” and that they would “make us financially strong.”
The tariffs have had significant impacts on various countries, including India, which recently faced a 50% tariff on its exports to the US.
The tariff has been estimated to impact trade worth billions of dollars and risk Washington-New Delhi ties. Brazil has also faced a 50% tariff on its exports to the US, following its prosecution of former President Jair Bolsonaro.
The court’s decision to allow the tariffs to remain in place while the administration appeals to the Supreme Court has been seen as a significant blow to Trump’s critics, who had hoped that the tariffs would be immediately halted.
The case is expected to have far-reaching implications for the US economy and trade policy, and will likely be closely watched by experts and policymakers around the world.
In a related development, Canada has announced that it will ease most retaliatory tariffs against the US, exempting most Canadian goods from US tariffs while some sectoral duties remain. The move is seen as an effort to reduce the impact of Trump’s tariffs on the Canadian economy.
The ongoing trade tensions between the US and its trading partners have raised concerns about the potential consequences for the global economy.
As the situation continues to unfold, it remains to be seen how the US and its trading partners will navigate the complex issues surrounding tariffs and trade policy.