Trump's Tariffs Stay Put: Appeals Court Rejects Challenge

By Dietrich Knauth and Sarah Marsh

(The News Pulse) – On Thursday, a federal appeals court briefly brought back President Donald Trump’s broadest set of tariffs, just one day following when a trade court determined that Trump had overstepped his power with these levies and instructed for their prompt suspension.

The United States Court of Appeals for the Federal Circuit in Washington said it was pausing the lower court's ruling to consider the government's appeal, and ordered the plaintiffs in the cases to respond by June 5 and the administration by June 9.

Wednesday's surprise ruling by the U.S. Court of International Trade had threatened to kill or at least delay the imposition of Trump's so-called Liberation Day tariffs on imports from most U.S. trading partners and additional tariffs on goods from Canada, Mexico and China. The latter was related to his accusation that the three countries were facilitating the flow of fentanyl into the U.S.

A three-judge appellate tribunal determined that the U.S. Constitution grants Congress, rather than the President, the authority to impose taxes and tariffs. The ruling stated that the President overstepped his bounds by using the International Emergency Economic Powers Act, which was designed to tackle threats arising from national crises.

High-ranking officials from the Trump administration stated that they remained unfazed by the trade court's decision, indicating their belief that they would win upon appeal or use alternative presidential authorities to make sure these measures take effect.

Trump has used the threat of charging U.S. importers costly tariffs for goods from almost every other country in the world as leverage in international trade talks, a strategy the trade court's ruling would upend. The trade court ruling had not interfered with any negotiations with top trading partners that are scheduled in the days ahead, Trump's administration said.

U.S. trade partners “are approaching us with sincerity and striving to finalize the agreements before the 90-day suspension period concludes,” Treasury Secretary Scott Bessent stated during an interview on Fox News. “We haven’t observed any shift in their stance over the last two days. Actually, I am expecting a sizable Japanese contingent to visit my office early tomorrow.”

Many U.S. trading partners offered careful responses. The British government said the trade court's ruling was a domestic matter for the U.S. administration and noted it was "only the first stage of legal proceedings." Both Germany and the European Commission said they could not comment on the decision.

The Canadian Prime Minister, Mark Carney, endorsed the trade tribunal's decision, stating that it aligned with Canada's long-held stance, which maintained that President Trump’s tariffs were illegal.

The financial markets, known for their extreme volatility in reaction to each development of Trump’s tumultuous trade war, showed guarded hope following the trade court decision. However, stock market increases on Thursday remained somewhat restrained due to anticipation that the court's verdict could be subject to an extended appeal period.

Certainly, experts mentioned that significant ambiguity still surrounded the trajectory of Trump's tariffs. These policies have resulted in over $34 billion in missed opportunities and increased expenses for businesses, as per an analysis by The News Pulse.

Certain industry-specific tariffs, like those applied to imported steel, aluminum, and cars, were enacted by Trump through distinct provisions citing national security reasons and remained untouched by the court's decision.

The Liberty Justice Center, the nonprofit organization representing five small enterprises that filed lawsuits against the tariffs, stated that the appellate court’s interim stay was merely a formal procedure.

Jeffrey Schwab, the senior counsel for the organization, stated that the appellate court will likely side with the small enterprises that experienced irreversible damage due to "losing crucial vendors and clients, being compelled to make expensive adjustments to their established supply networks, and, more critically, facing an immediate peril to their business’s existence itself."

Earlier on Thursday, another federal court determined that Trump exceeded his authority when he invoked the International Emergency Economic Powers Act to impose retaliatory tariffs of at least 10% on products from most U.S. trade allies. The same ruling addressed additional duties of 25% on items coming from Canada, Mexico, and China due to concerns about fentanyl.

The decision was more limited though, with the injunction halting the tariffs applicable solely to the toy firm involved in the lawsuit. The government has also challenged this particular ruling through an appeal.

UNCERTAINTY PERSISTS

Following a market revolt after his major tariff announcement on April 2, Trump paused most import duties for 90 days and said he would hammer out bilateral deals with trade partners.

However, aside from an agreement reached with Britain earlier this month, other pacts continue to be out of reach. Analysts mentioned that the trade tribunal’s decision regarding the tariffs along with the ambiguity surrounding the appeal procedures might prevent nations such as Japan from quickly entering into new arrangements.

"If the appeal doesn’t prove successful in the coming days, the primary victory lies in gaining more time to get ready, along with a limit placed on the scope of tariffs — they cannot go beyond 15% for now,” stated George Lagarias, who serves as the chief economist at Forvis Mazars international advisors.

The trade court’s decision was expected to decrease the general effective U.S. tariff rate to around 6%. However, an emergency stay imposed by the appellate court ensures that tariffs will continue at approximately 15%, as per analyses conducted by Oxford Research. This percentage reflects what it has been since President Trump recently declared a brief ceasefire, which lessened stringent duties on Chinese products through late summer. Previously, under his administration, starting from January, these rates typically hovered between 2% and 3%.

The trade war initiated by Trump has unsettled manufacturers across various sectors, including luxury handbags, sneakers, home appliances, and automobiles, due to increased costs of raw materials.

The drinks firm Diageo along with automobile manufacturers General Motors and Ford are some of those that have withdrawn their predictions for the coming year.

Foreign firms such as Honda, Campari, Roche, and Novartis have mentioned that they might relocate some operations or increase their presence within the U.S. to reduce the effects of tariffs.

(Reported by Summer Zhen, Samuel Indyk, and Sarah Marsh; Extra Reporting Provided by Luc Cohen, Doina Chiacu, Nicholas P. Brown, and David Ljunggren; Written By Joseph Ax, Jonathan Allen, Dan Burns, and Barbara Lewis; Edited by Catherine Evans, Giles Elgood, Nick Zieminski, and Matthew Lewis)