Trump's tariffs on Canada, world to stay in place during case, court rules
A federal appeals court agreed on Tuesday that U.S. President Donald Trump's sweeping global tariffs will remain in place while a case is heard — extending an emergency stay granted after a lower court found the devastating duties unlawful.
The United States Court of Appeals for the Federal Circuit found 'a stay is warranted under the circumstances.' It provides a temporary victory for the Trump administration as it hits its first legal barriers for realigning global trade.
'The Trump administration is legally using the powers granted to the executive branch by the Constitution and Congress to address our country's national emergencies of persistent goods trade deficits and drug trafficking,' said White House spokesman Kush Desai in an emailed statement Tuesday.
'The U.S. Circuit Court of Appeals' stay order is a welcome development, and we look forward to ultimately prevailing in court.'
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The U.S. Court of International Trade last month said Trump does not have the authority to wield tariffs on nearly every country through the use of the International Economic Emergency Powers Act of 1977.
The act, usually referred to by the acronym IEEPA, is a national security statute that gives the U.S. president authority to control economic transactions after declaring an emergency.
The ruling from the three-judge panel at the New York-based federal court in May said 'any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.' It said 'the challenged tariff orders will be vacated,' representing a nationwide injunction against any further imposition of the duties.
The Trump administration quickly was granted an emergency motion, essentially freezing the decision by the trade court that blocked the so-called 'Liberation Day' and fentanyl-related tariffs.
The appeals court upheld that stay but noted the need for an expedited hearing, saying 'these cases present issues of exceptional importance warranting expedited en banc consideration.' A proposed schedule says arguments are expected in court by July 31.
That means that countries will continue to be hit by those duties, for now.
5:32
Economist says counter-tariffs on the United States would hurt Canada
George Mason University law professor Ilya Somin called it an 'unfortunate decision.' Somin, along with the Liberty Justice Center, represents five American small businesses pushing against the tariffs.
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He noted that the court did go out of its way to indicate this is not a ruling on the merits, and ordered an expedited schedule for consideration of the case.
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'We have a strong case, and I remain guardedly optimistic that the appellate court will ultimately see that the president's claim of virtually unlimited power to impose tariffs is blatantly illegal — which is what every court to have considered the issue so far has concluded,' Somin said in an email to The Canadian Press.
Stock markets have been in turmoil and supply chains have been upended as Trump used unprecedented presidential power to enact his tariffs. Up until Trump's return to the White House, IEEPA had never been used by a president to impose tariffs.
Trump hit Canada with economywide duties in March after he declared an emergency at the northern border related to the flow of fentanyl. He partially paused levies a few days later for imports that comply with the Canada-U.S.-Mexico Agreement on trade.
U.S. government data shows a minuscule volume of fentanyl is seized at the northern border.
Trump took his trade war to the world in April with duties on nearly every country saying America's trade deficits amounted to a national emergency. The president walked back the most devastating duties a few hours later but left a 10 per cent universal tariff in place for most countries.
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Trump said the 90-day pause would give countries time to negotiate a deal. The president said if countries didn't comply he would simply set tariff rates himself.
2:41
U.S. trade court 'brazenly abused' judicial powers to block Trump tariffs, WH says
White House Press Secretary Karoline Leavitt has said that the Supreme Court should 'put an end to this' and called the lower court's decision 'judicial overreach.'
The appeal ruling will consider two different cases that were pushing against Trump's tariffs. One included the five American small businesses against Trump's worldwide tariffs, and the other stemmed from 12 states arguing against both the 'Liberation Day' duties and the fentanyl-related tariffs.
At least seven lawsuits are challenging the tariffs.
Lawyers for the businesses say IEEPA does not mention tariffs and the U.S. Constitution gives power over taxes and tariffs to Congress. They say Trump is misusing the statute.
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Lawyers for Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont argued that tariffs make U.S. trade policy dependent on Trump's whims.
Thirty-three senators also filed an amicus brief — a legal submission from a group that's not party to the action — in the case, saying the duties would cause harm to small- and medium-sized businesses while also grabbing powers that should be assigned to Congress.
'Small businesses do not have cash-on-hand or capital reserves to pay the increased tariffs, nor can they quickly adapt to them by modifying supply chains,' it said. 'If they cannot pass on the tariff costs to consumers — which would create additional harms for… constituents — many face letting employees go or filing for bankruptcy. Even a few weeks of additional tariffs means small businesses will suffer irreparable harm.'
Canada is also being hit with tariffs on steel, aluminum and automobiles. Trump used different powers under the Trade Expansion Act of 1962 to enact those duties.
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