Most of Trump’s tariffs are not legal, US court rules
Dietrich Knauth |
A US court has ruled most of President Donald Trump’s tariffs are illegal but can remain in place for now to allow appeals.
The decision comes as a legal fight over the independence of the Federal Reserve also seems bound for the Supreme Court, setting up an unprecedented legal showdown over Trump’s entire economic policy.
Trump has made tariffs a pillar of US foreign policy in his second term, using them to exert political pressure and renegotiate trade deals with nations that export goods to the United States.
The tariffs have given the Trump administration leverage to extract economic concessions from trading partners but have also increased volatility in financial markets.
“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,” the court said.
The court allowed the tariffs to remain in place through October 14 to give the Trump administration a chance to file an appeal with the US Supreme Court.
Trump lamented the decision by what he called a “highly partisan” court, posting on Truth Social: “If these Tariffs ever went away, it would be a total disaster for the Country.”
He nonetheless predicted a reversal, saying he expected tariffs to benefit the country “with the help of the Supreme Court”.
The 7-4 decision from the US Court of Appeals for the Federal Circuit in Washington DC addressed the legality of what Trump calls “reciprocal” tariffs imposed as part of his trade war in April, as well as a separate set of tariffs imposed in February against China, Canada and Mexico.
Democratic presidents appointed six judges in the majority and two judges who dissented, while Republican presidents appointed one judge in the majority and two dissenters.
The court’s decision does not impact tariffs issued under other legal authority, such as Trump’s tariffs on steel and aluminium imports.
Trump justified both sets of tariffs – as well as more recent tariffs – under the International Emergency Economic Powers Act. IEEPA gives the president the power to address “unusual and extraordinary” threats during national emergencies.
“It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs,” the ruling said.
“The statute neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President’s power to impose tariffs.”
The 1977 law had historically been used for imposing sanctions on enemies or freezing their assets.
Trump, the first president to use IEEPA to impose tariffs, says the measures were justified given trade imbalances, declining US manufacturing power and the cross-border flow of drugs.
Trump’s Department of Justice has argued the law allows tariffs under emergency provisions that authorise a president to “regulate” imports or block them completely.
Trump declared a national emergency in April over the fact the US imports more than it exports, as the nation has done for decades.
William Reinsch, a former senior Commerce Department official now with the Centre on Strategic and International Studies, said the Trump administration had been bracing for this ruling.
“It’s common knowledge the administration has been anticipating this outcome and is preparing a Plan B, presumably to keep the tariffs in place via other statutes.”
There was little reaction to the ruling in after-hours stock trading.
“The last thing the market or corporate America needs is more uncertainty on trade,” said Art Hogan, chief market strategist at B Riley Wealth.
Trump is also locked in a legal battle to remove Federal Reserve governor Lisa Cook, potentially ending the central bank’s independence.
“I think it puts Trump’s entire economic agenda on a potential collision course with the Supreme Court. It’s unlike anything we’ve seen ever,” said Josh Lipsky, chair of international economics at the Atlantic Council.
Reuters
