Latest news with #TradingWiththeEnemyAct
Yahoo
12 hours ago
- Business
- Yahoo
Why has a US court blocked Donald Trump's tariffs – and can he get round it?
Donald Trump is facing the biggest challenge yet to his trade policies after a US federal court ruled that his 'liberation day' tariff plan is illegal. In the latest twist in the US president's erratic global trade war, the ruling could unpick border taxes announced early last month. However, the White House has filed a notice of appeal, and tariffs will stay in place as the case progresses through the courts. The US Court of International Trade (CIT) ruled that Trump's use of a sweeping presidential power – the International Emergency Economic Powers Act (IEEPA) – to justify his 2 April tariffs, as well as separate levies imposed on imports from Mexico, Canada and China, was wrong. Legal complaints about the tariffs had been lodged with the court by the nonpartisan Liberty Justice Center campaign group on behalf of small US businesses, as well as a dozen US states; including Oregon, Arizona and New York. IEEPA is a 1977 act allowing the president to regulate commerce during a national emergency, without the need to go through Congress, and builds on the Trading With the Enemy Act introduced during the first world war. However, the three-judge court panel ruled that the economic concerns cited by the White House to justify the tariff plans do not meet the required test of being 'unusual and extraordinary threats'. The judges had been nominated to the court by three presidents: Ronald Reagan, Barack Obama and Trump himself. Trump used IEEPA as the basis for his announcement on 2 April of 10% worldwide tariff and country-specific border taxes at higher levels – since paused for 90 days to allow for trade talks – as well as for fentanyl-related tariffs imposed on Canada, Mexico and China. Other targeted tariffs announced by Trump, on steel, aluminium and cars, were imposed under a separate law – section 232 of the 1962 Trade Expansion Act – and therefore remain in place. Washington's appeal will presumably go all the way to the supreme court if necessary. Given that the highest legal authority in the US recently ruled in favour of the president in a case involving the dismissal of a senior labour official – analysts are questioning whether the CIT decision could also be overturned. In the short-term, the judgment will add an extra layer of uncertainty to an already volatile trade situation. Investors have broadly cheered the ruling as a signal that Washington's tariff policies could be curbed, limiting the hit to global trade and the US economy. Still, additional uncertainty will further dent investor and business confidence. Washington has dialled up and down tariff threats as a tool in trade talks. A powerful court ruling against the president could undermine his push to strike maximum concessions, at a crunch moment in talks with China, Japan, the EU and India. On Tuesday, Trump had signalled progress with the EU, having a week earlier threatened a 50% tariff on imports from the 27-nation bloc from 1 June, before postponing the plan two days later, to 9 July. Brussels could now, however, scent weakness in the White House approach. A UK spokesperson said that despite the court ruling, the government would press on with negotiations to conclude the trade deal it sealed on 8 May – the first after Trump's 'reciprocal' tariffs were announced – as no legal text exists to bring into force the concessions Keir Starmer won. At a headline level the ruling is a devastating blow to Trump's economic agenda, by depriving the self-described 'tariff man' of his most powerful, and most favoured, policy tool. However, there are various legal routes for the president to pursue his cornerstone economic policy. These include section 122 of the Trade Act of 1974, section 232 of the Trade Expansion Act of 1962, and sections 301 and 338 of the Trade Act of 1930. Each grants the president powers to intervene on trade policy, albeit in an often slower and, in some instances, more limited way. 'It sounds like good news, but Trump has various other mechanisms to invoke tariffs or have leverage in trade negotiations. It's just the speed of their rollout will be weeks/months rather than immediately as he did with the IEEPA,' said Jordan Rochester, an analyst at the Japanese bank Nomura. Another major focus for investors will be the consequences for Washington's rising levels of federal borrowing and debt amid mounting concern in financial markets. Trump had been banking on additional revenues from tariffs to help offset some of his sweeping tax cuts announced last week in his One Big Beautiful Bill Act. The bill, passed last week by the lower house in Congress, could add $5tn (£3.7tn) to US debt levels.
Mint
2 days ago
- Business
- Mint
President Trump isn't a tariff king
In a ruling heard 'round the world, the U.S. Court of International Trade on Wednesday blocked President Trump's sweeping tariffs. This is an important moment for the rule of law as much as for the economy, proving again that America doesn't have a king who can rule by decree. The Trump tariffs have created enormous costs and uncertainty, but now we know they're illegal. As the three-judge panel explains in its detailed 52-page ruling, the President exceeded his emergency powers and bypassed discrete tariff authorities delegated to him by Congress. The ruling erases his April 2 tariffs as well as those on Canada and Mexico. Small businesses and several states (V.O.S. Selections v. U.S.) challenged Mr. Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs willy-nilly. That law gives the President broad authority in a national emergency to 'deal with any unusual and extraordinary threat" including to 'regulate" the 'importation" of foreign property. After declaring fentanyl an emergency, the President in February slapped tariffs on Mexico, Canada and China. Then in April he deemed the U.S. trade deficit an emergency and imposed tariffs of varying rates on the world. He later reduced those to 10% across the board for 90 days, supposedly to allow time to negotiate trade deals. No other President has used IEEPA to impose tariffs. As the trade court explains, Richard Nixon used the law's precursor, the Trading With the Enemy Act, in 1971 to impose 10% tariffs for a short period to address a balance of payments problem. The Justice Department said Mr. Trump's tariffs are no different. Not so. As the panel notes, Nixon tariffs were upheld by an appeals court because they were a 'limited surcharge" and 'temporary measure calculated to help meet a particular national emergency, which is quite different from imposing whatever tariff rates he deems desirable." The latter is what Mr. Trump did, at one point jacking up rates to 145% on China. Congress also limited the President's emergency powers in IEEPA to prevent overreach. 'The legislative history surrounding IEEPA confirms that the words 'regulate . . . importation' have a narrower meaning than the power to impose any tariffs whatsoever," the panel notes. Mr. Trump invoked IEEPA because he wanted to impose tariffs as he sees fit. But the Constitution doesn't let the President ignore Congress and do whatever he wants. 'Under the major questions doctrine, when Congress delegates powers of 'vast economic and political significance,' it must 'speak clearly,'" the judges stress. Democrats panned the major questions doctrine when the High Court used it to block Joe Biden's student-loan forgiveness, but perhaps they will now see its wisdom. The judges also say Mr. Trump's fentanyl tariffs are unlawful because they don't, as IEEPA requires, 'deal with" their stated objectives. The government's theory would permit 'any infliction of a burden on a counterparty to exact concessions," the panel notes. 'If 'deal with' can mean 'impose a burden until someone else deals with,' then everything is permitted." Exactly. The court's ruling effectively slams the door on IEEPA as a basis to impose tariffs. This means a future Democratic President can't declare a climate emergency and wield tariffs to punish countries for CO2 emissions. Conservatives ought to cheer this restraint on one-man rule. White House officials are attacking the trade court's ruling as liberal judicial overreach, though the three judges were Reagan, Obama and Trump appointees. On Thursday the U.S. Court of Appeals for the Federal Circuit put a stay on the trade court's ruling while it considers Mr. Trump's emergency appeal. Meanwhile, a separate federal judge also ruled the tariffs illegal under IEEPA. The White House boasts it will win at the Supreme Court, but our reading of the trade court's opinion suggests the opposite. Mr. Trump's three Court appointees are likely to invoke the major-questions precedent. Mr. Trump has other laws he can use to impose tariffs, though most are more limited than his emergency claims. The most expansive is Section 338 of the 1930 Smoot-Hawley Act, which lets a President impose duties up to 50% on countries found to discriminate against the U.S. But no President has ever done so. Mr. Trump would be wiser to heed the trade court's ruling as the political gift it is and liberate his Presidency and the economy from his destructive tariff obsessions.
