The US supreme court is set to decide on the future of Donald Trump’s tariffs policy after a lower appeals court ruled that the US president had exceeded his powers.
A divided US appeals court ruled on Friday that most of Donald Trump’s tariffs are illegal, potentially undercutting the Republican president’s use of the levies as a key international economic policy tool.
The court allowed the tariffs to remain in place until October 14th to give the Trump administration a chance to file an appeal with the US supreme court. The president has indicated that the decision will be appealed and on Sunday US trade representative, Jameson Greer, said that despite the decision the US continued in negotiations with other countries on trade deals.
The tariffs in question are the main so-called reciprocal tariffs imposed by the administration, including the 15 per cent tariff on many imports from Ireland and other EU countries. However, tariffs which Trump is considering on pharma and semiconductors are on a separate legal basis and are thus not covered by the appeals court judgement.
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Mr 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 countries that export goods to the US.
The tariffs have given the Trump administration leverage to extract economic concessions from trading partners but have also increased volatility in financial markets.
The 7-4 decision from the US court of appeals for the federal circuit in Washington, DC, addressed the legality of what Mr 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.
The case will be appealed to the US supreme court, according to Mr Trump. The decision by the supreme court will be seen as a vital sign of whether the US legal system can act to constrain the president’s policies.
Mr Trump described Friday’s ruling as “incorrect”, adding that all tariffs were still in effect.
“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,” Mr Trump said in a post on Truth Social.
Mr Trump has 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.
The 1977 law had historically been used for sanctioning enemies or freezing their assets. Mr 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.
The law does not mention tariffs, although it allows the president to take a wide range of actions in response to a crisis. Mr Trump’s department of justice has argued that the law allows tariffs under emergency provisions that authorise a president to “regulate” imports or block them completely.
Mr Trump declared a national emergency in April over the fact that the US imports more than it exports, as the nation has done for decades. Mr Trump said the persistent trade deficit was undermining US manufacturing capability and military readiness. Mr Trump said the February tariffs against China, Canada and Mexico were appropriate because those countries were not doing enough to stop illegal fentanyl from crossing US borders, a claim the countries have denied.
The appeals court ruled on two cases, one brought by five small US businesses and the other by 12 Democratic-led US states, which argued that IEEPA does not authorise tariffs.
The US constitution grants Congress, not the president, the authority to issue taxes and tariffs, and any delegation of that authority must be both explicit and limited, according to the lawsuits.
The New York-based US court of international trade ruled against Mr Trump’s tariff policies on May 28th, saying the president had exceeded his authority when he imposed both sets of challenged tariffs. The three-judge panel included a judge who was appointed by Mr Trump in his first term.
Another court in Washington, DC, ruled that IEEPA does not authorise Mr Trump’s tariffs, and the government has appealed that decision as well. At least eight lawsuits have challenged Mr Trump’s tariff policies, including one filed by the state of California. - Reuters
