What's next for President Trump's tariffs after whiplash court rulings?

Yahoo

2 days ago

President Donald Trump's steepest tariffs fell into legal limbo this week, casting uncertainty over a major swath of the president's signature economic policy.
The Trump administration could ultimately prevail in a court battle over the levies or seek other legal authorities to reimpose some of the tariffs, experts told ABC News, but a complete revival of the policy now faces formidable obstacles.
Two separate federal courts invalidated far-reaching levies on dozens of countries unveiled in a Rose Garden ceremony that Trump had dubbed "Liberation Day." The rulings also struck down 30% tariffs imposed on China as well as a baseline 10% levy slapped on nearly all imports, among other measures.
MORE: Trump claims China 'totally violated' trade agreement with US
A federal appeals court moved to temporarily reinstate the tariffs on Thursday afternoon, however, keeping the levies in place while judges weigh the underlying legal justification.
Here's what to know about what's next for Trump's tariffs and what happens to the tax revenue already paid, according to experts.
The court rulings this week set off a legal battle over the tariffs that could stretch on for more than a year and make its way to the Supreme Court, experts told ABC News.
The rulings against the levies in two federal courts – the U.S. Court of International Trade and the U.S. District Court in Washington, D.C. -- centered on Trump's unprecedented invocation of the International Economic Emergency Powers Act as a legal justification for tariffs.
The 1977 law allows the president to stop all transactions with a foreign adversary that poses a threat, including the use of tools like sanctions and trade embargoes. But the measure does not explicitly permit tariffs, putting Trump in untested legal territory.
"These are momentous actions to reverse a major initiative of the president of the United States," Alan Wolff, a former deputy director-general of the World Trade Organization, told ABC News. "It's a real loss for the White House."
The temporary reinstatement of the tariffs allows the policy to continue as the legal fight plays out, but the ruling does not indicate how judges will weigh in on the merits of the case, Wolff added.
"It doesn't change the circumstances in court all that much," Wolff said. "I'm sure the White House would like this to get straightened out as soon as possible."
In a social media post, Trump slammed the judges at the U.S. Court of International Trade and touted the benefits of his tariff policy.
"Where do these initial three Judges come from? How is it possible for them to have potentially done such damage to the United States of America? Is it purely a hatred of 'TRUMP?' What other reason could it be?" Trump said.
The three-judge panel at the U.S. Court of International trade included one judge appointed by Ronald Reagan, one judge appointed by Barack Obama and one judge appointed by Trump himself.
Trump added: "In this case, it is only because of my successful use of Tariffs that many Trillions of Dollars have already begun pouring into the U.S.A. from other Countries, money that, without these Tariffs, we would not be able to get. It is the difference between having a rich, prosperous, and successful United States of America, and quite the opposite."
As of Wednesday, U.S. tariffs had generated about $68 billion in revenue so far this year, though only a portion of those funds owes to levies at risk of being struck down, according to a Politico analysis.
The duration of the legal battle may depend on the rulings handed down from the two appeals courts handling each of the Trump administration's challenges, Patrick Childress, a former trade official under President Joe Biden and Trump, told ABC News.
If the two appellate courts handed down opposing decisions, it would raise the likelihood that the case will take over a year and ultimately reach the Supreme Court, Childress said. But, he added, a pair of similar rulings at the appeals court level could fast-track resolution of the case.
For now, the fate of the tariffs at issue remains highly unclear, even after the appeals court temporarily reinstated them, Childress added.
"There's still a very similar amount of uncertainty," Childress said.
If the courts ultimately rule against Trump's tariffs, the White House may explore other legal authorities as a means of reviving some of the levies, experts said.
In some cases, however, the alternative legal statutes would require time-consuming investigations at federal agencies and put limits on the scope of the levies.
Section 301 of the Trade Act of 1974 allows the executive to invoke temporary tariff authority in response to an adverse trade policy taken up by another country.
Trump's tariffs on a wide swath of Chinese goods during his first term relied on Section 301, which Biden invoked in service of tariffs of his own.
The White House may use Section 301 to reimpose tariffs on Mexico, Canada and China over the nations' respective roles in the transport of fentanyl to the U.S., Childress said. But a wide-ranging invocation of Section 301 for tariffs on dozens of countries could pose administrative challenges, since each use of the measure requires a federal investigation of the alleged abuses, he added.
"It wouldn't be impossible but it would require a lot of investigations," Childress said.
The Trump administration is weighing the use of a separate provision of the Trade Act of 1974 to impose country-specific tariffs of up to 15% for 150 days, The Wall Street Journal reported.
The White House could also expand its use of Section 232 of the Trade Expansion Act of 1962, which allows the executive to impose tariffs on a specific product if the Commerce Department deems foreign production a threat to national security.
Trump already has invoked the measure to slap 25% tariffs on cars, steel and aluminum. Additional sector-specific tariffs may hit pharmaceuticals and semiconductor chips, according to recent comments from Trump.
Importers who have paid the tariffs at issue will receive government refunds if the levies fall victim to legal challenges, experts told ABC News.
"Companies should get the money back if that's the result -- and it's a lot of money," Wolff said.
MORE: Appeals court reinstates Trump's tariffs for now after ruling blocking them
The federal government will likely slow down the issuance of refunds until the legal cases are resolved, Childress said.
"Importers who made the payments could be looking at one or even two years until those refunds get paid," Childress added.
When seeking a refund, companies will need to provide detailed information about their imports, the date of shipment and where the products entered the U.S.
"All of that information is necessary to get a refund further down the road," Childress said.
What's next for President Trump's tariffs after whiplash court rulings? originally appeared on abcnews.go.com