A FEDERAL appeals court provisionally reinstated the most extensive of President Donald Trump’s tariffs on Thursday, just one day after a US trade court determined that Trump had overstepped his authority in imposing the duties and ordered an immediate halt to them.
The United States Court of Appeals for the Federal Circuit in Washington indicated it was temporarily suspending the lower court’s decision to evaluate the government’s appeal, directing the plaintiffs in the cases to respond by June 5 and the administration by June 9.
Wednesday’s unexpected ruling by the US Court of International Trade had posed a threat to eliminate or at least postpone the implementation of Trump’s so-called Liberation Day tariffs on imports from many US trading partners and additional tariffs on goods from Canada, Mexico, and China. The latter was linked to his claims that these nations were facilitating the influx of fentanyl into the US.
The trade court’s three-judge panel determined that the Constitution granted Congress, not the president, the authority to impose taxes and tariffs, asserting that the president had overreached by invoking the International Emergency Economic Powers Act, a statute designed to address threats during national emergencies.
High-ranking officials within Trump’s administration asserted they were unfazed by the trade court’s ruling, expressing confidence that they would either prevail in their appeal or utilize alternative presidential powers to ensure the tariffs remain in effect.
Trump has leveraged the threat of imposing expensive tariffs on US importers for goods from nearly every country as a strategy in international trade discussions, a tactic that the trade court’s ruling could disrupt. According to Trump’s administration, the trade court ruling did not impede any ongoing negotiations with key trading partners scheduled in the near future.
Trump himself stated in a message shared on social media that he hoped the US Supreme Court would “overturn this dreadful, country-threatening decision” of the trade court, while criticizing the judiciary as anti-American.
“The appalling ruling suggested that I would need to obtain Congressional approval for these tariffs,” Trump wrote Thursday evening. “If allowed to persist, this would utterly dismantle Presidential Power — The Presidency would never be the same! This decision is being applauded globally by every nation except the United States of America.”
Numerous US trading partners provided cautious responses. The British government stated that the trade court’s ruling was a domestic issue for the US administration and emphasized it was “only the initial phase of legal proceedings.” Both Germany and the European Commission, the European Union’s executive body, indicated they could not comment on the ruling.
Canadian Prime Minister Mark Carney remarked that the trade court’s finding was “in line with Canada’s longstanding stance” asserting that Trump’s tariffs were illegal.
Financial markets, which have fluctuated due to the unpredictable developments in Trump’s turbulent trade war, reacted with cautious optimism to the trade court ruling; however, stock gains on Thursday were largely curtailed by expectations of a potentially lengthy appeals process.
Analysts emphasized that considerable uncertainty remained concerning the future of Trump’s tariffs, which have inflicted losses exceeding $34 billion in sales and elevated costs on companies, according to a Reuters analysis.
Specific tariffs on sectors such as steel, aluminum, and automobiles were imposed by Trump under different authorities based on national security concerns and were not affected by the ruling.
The Liberty Justice Center, a nonprofit organization representing five small businesses that litigated against the tariffs, stated that the appeals court’s temporary pause was a procedural measure.
Jeffrey Schwab, senior counsel for the center, mentioned that the appeals court would eventually concur with the small businesses that faced irreparable harm due to “the loss of essential suppliers and clients, forced and costly adjustments to established supply chains, along with the most significant threat to the very existence of these businesses.”
A different federal court earlier on Thursday also determined that Trump exceeded his authority in utilizing the International Emergency Economic Powers Act for what he termed reciprocal tariffs of at least 10% on goods from most US trading partners, as well as the separate 25% duties on goods from Canada, Mexico, and China associated with fentanyl.
This ruling was much narrower; however, and the relief order halting the tariffs applied solely to the toy company that initiated the case. The administration has filed an appeal against that ruling as well.
UNCERTAINTY PERSISTS
In the wake of a market backlash following his significant tariff announcement on April 2, Trump paused most import duties for 90 days, stating he would negotiate bilateral agreements with trade partners.
Yet aside from an agreement with Britain this month, pacts remain elusive, and the trade court’s ruling regarding the tariffs along with the uncertainty of the appeals process may deter countries like Japan from hastily entering into agreements, analysts suggested.
“Assuming that an appeal doesn’t succeed in the coming days, the primary advantage is time to prepare, as well as a limitation on the extent of tariffs — which cannot surpass 15% for the moment,” remarked George Lagarias, chief economist at Forvis Mazars international advisors.
The trade court ruling would have reduced the overall effective US tariff rate to approximately 6%, but the appellate court’s emergency stay means it will remain around 15%, as per estimates from Oxford Research. This has been the rate since Trump struck a temporary agreement earlier this month that lowered punitive charges on Chinese goods until late summer. Comparatively, the effective tariff rate was around 2% to 3% before Trump assumed office in January.
Trump’s trade war has unsettled producers of a wide range of products, from luxury handbags and sneakers to household appliances and vehicles, as the costs of raw materials have surged.
Companies like Diageo, General Motors, and Ford have abdicated their forecasts for the upcoming year.
Non-US firms such as Honda, Campari, Roche, and Novartis have indicated they are contemplating relocating operations or expanding their US presence to alleviate the consequences of tariffs. — Reuters
