Thanks to a federal trade court, we may avoid the worst of former President Donald Trump’s sweeping imports tariffs. This decisive action is already upending global financial markets. The ruling comes amidst multiple lawsuits challenging Trump’s tariffs, which he implemented in an effort to address America’s enduring trade deficits.
In 2023, Trump imposed tariffs ranging from 10% to 54% on imports from various countries, including Canada, China, and Mexico. Needless to say, he made the case that these levies were absolutely necessary. They intended to combat the unlawful inflow of immigrants and synthetic opioids into America. The court held that the president’s actions exceeded the powers that IEEPA allows to the president. This ruling reaffirms the checks on presidential power during disasters that remain firmly in place.
Beyond the court’s decision to halt the tariffs, the ruling plunged markets into chaos. Immediately following the decision, the U.S. dollar spiked against all major currencies, including the euro, yen and Swiss franc. Economists had for months lowered their expectations for U.S. economic growth because of the uncertainty created by Trump’s tariff plans.
As many as seven lawsuits have sprung up challenging Trump’s tariffs, with a coalition of a dozen states, led by Oregon, suing. In reaching this ruling, the court reiterated that decisions affecting trade cannot be made on a whim and reinforced the need to follow the rule of established law.
“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim.” – Dan Rayfield
Like the courts at the time, Trump’s administration pointed to earlier courts accepting similar actions by then-President Richard Nixon back in 1971. For one, they claimed only Congress can decide whether Trump’s justification for declaring an emergency is in line with current statutory law. The courts, they argued, lack that authority.
The Court of International Trade emphatically rejected this claim. As an initial matter, the court recognized that Trump’s tariff strategy has merits and is potentially effective. In a huge victory, it found that all these actions are illegal under federal law.
“The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.” – Court of International Trade
In the days after the ruling, reactions to it were divided among Trump’s supporters and detractors. Almost universally, advocates of the tariffs expressed outrage over the court’s ruling.
“The judicial coup is out of control.” – Stephen Miller
Many joined in expressing that the judiciary’s role is essential, especially today, in keeping checks on the executive order and other branches of government’s actions.
“It is not for unelected judges to decide how to properly address a national emergency.” – Kush Desai
Trump’s administration now faces a critical juncture. Without the tariffs, the picture will take a more long-term turn. This requires pursuing longer trade investigations under different statutory authorities. In theory, you can take the Manhattan-based court’s ruling on appeal to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. Or, if needs be, all the way to the U.S. Supreme Court.
Now the markets are beginning to wake up to this very new reality. Analysts are working and awaiting additional analysis to inform what Trump’s further tariff activity means for U.S. economic policy. How these legal challenges ultimately play out will have a dramatic impact on US trade policy and economic priorities in the months ahead.