In the latest development in the long-running Trump tariff war, a federal court intervened in the matter yesterday with a ruling finding that Trump does not have “unbounded authority” to impose sweeping tariffs on imports from many different countries.
The ruling immediately set off a new period of uncertainty, questions, and speculation around what will happen next. Will tariffs be allowed to ultimately go into effect? Will they be removed entirely? Will the answer be some middle ground? We try and answer the big questions in this article.
The Court Ruling
The U.S. Court of International Trade, a federal court which oversees international trade and commerce matters, issued its decision, which proved an early setback for the U.S. President. Trump had made his decision under perceived authority granted to him by the International Emergency Economic Powers Act, passed in 1977. In its ruling, the court said that Trump did not have the authority to impose sweeping tariffs under the law’s guidelines.
It should be noted that the 1977 law that the court referred to does not explicitly name “tariffs” in it, rather referencing “trade embargoes” and “sanctions”.
The panel of judges which ruled on the matter was bipartisan, including both Republican and Democratic-appointed judges.
What Happens Next?
Like many court rulings against Trump, this one is almost certain to be appealed to a higher court. Trump and his allies already mentioned the possibility of appealing all the way up to the U.S. Supreme Court. However, winning an appeal is not a sure bet in this case. The 1977 law is very clear, and Trump may well be blocked until he can issue the tariffs under a different presidential authority (which as of yet is unknown.)
By ruling against Trump, the court did not explicitly disqualify all tariffs from being imposed – rather, a very specific ruling was handed down against “broad and sweeping” tariffs, as the Trump administration has described them.
Will tariffs go away?
It was not immediately clear as of Thursday, May 29th, whether Trump planned on adhering to the court ruling as of this week, or if tariff collections would be paused immediately. The Trump administration was given 10 days to comply with the court order and end tariffs, by shutting down the collection processes that have been put into place.
The effects of the court’s tariff decision
Immediately, the court’s ruling has removed much of the legitimacy of Trump’s threats to continue imposing higher tariffs. If a court rules as much, other countries most likely will not believe tariff threats from the U.S.
Over the longer term, the tariffs may be scaled back, in a win for many businesses who have lobbied against them. But it’s unlikely they will be completely removed, if for no other reason than the Trump administration can easily find other narrower authorities to issue trade policies – including tariffs – under. Tariffs have been imposed by various Presidents over the years without such court challenges, due to narrower implementations.
