Former President Donald Trump has petitioned the U.S. Supreme Court to overturn a recent ruling by a federal appeals court that deemed most of his trade tariffs illegal. This development follows a 7-4 decision from the federal appeals court, which criticized Trump’s tariffs as “unbounded in scope, amount and duration.” The court found that Trump had exceeded his authority under a 1977 law when he declared such tariffs.
On April 2, 2018, Trump announced these massive tariffs of 10-50% on thousands of U.S. imports. The appeals court found that Trump’s actions asserted an “expansive authority that is beyond the express limitations” of the law he relied upon. This ruling is a major blow to Trump’s tariff policies, which have been key cornerstones of his economic agenda.
The appeals court’s order means that the tariffs will remain in place at least through October 14. This would provide Trump’s administration an opportunity to get a review from the Supreme Court. The administration wanted a ruling issued by September 10. Rather than allowing the usual five months, they set a greatly accelerated schedule for arguments to be heard by November 10.
If the Supreme Court upholds the appeals court ruling, it could at least halve the current average U.S. effective tariff rate of 16.3%. Such a loss would require the U.S. government to refund tens of billions in illegally collected tariffs. These tariffs have been accruing since they were first implemented.
The ramifications of the court’s ruling go much deeper than just economic interests. Levi’s, the iconic U.S. apparel manufacturer, warned that increased Trump’s tariffs would further sour the mood of consumers overseas. The company warned that “rising anti-Americanism as a consequence of the Trump tariffs and governmental policies” could deter British shoppers from purchasing their denim products.
This decision could be met with extreme economic consequences. It endangers the preliminary trade agreements that Trump has started with a number of countries, including the United Kingdom and European Union. The episode exposes the fragile line connecting trade policy and foreign relations.
The federal appeals court’s signal was an important one. The 1977 law gives the president sweeping authority to act during national emergencies, but it doesn’t specifically authorize him to use tariffs or taxes. This second interpretation makes Trump’s eventual legal position, as he continued to chase down his appeal, even more tenuous.
“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.” – Federal Appeals Court
As this legal battle unfolds, the Supreme Court’s decision will shape not only Trump’s legacy but the future of U.S. trade policy. Whether or not the high court will hear the appeal is still an open question, as it still needs to agree to take up the case.