 "US court temporarily reinstates Trump tariffs a day after being struck down: What comes next in the battle?")
On, then off, and now back on. No, we aren’t talking about a complicated relationship but about Donald Trump’s tariffs — which, on Wednesday (May 28), were blocked by a US court, only for them to be reinstated a day later after a federal appeals court restored the ability to impose the levies.
On Thursday (May 29), 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.
This means that Trump’s ‘Liberation Day’ tariffs, which he had initially announced on April 2, are back on — bringing with them confusion and uncertainty.
We try to decipher and decode what’s going on in this Trump tariff war and what can we expect next in this saga.
US court blocks Trump’s tariffs
On Wednesday, the US Court of International Trade ruled that US President Trump did not have the authority under the International Emergency Economic Powers Act to impose sweeping tariffs and blocked them.
The ruling from the three-judge panel at the New York-based court came after several lawsuits arguing Trump’s “Liberation Day” tariffs exceeded his authority and left the country’s trade policy dependent on his whims.
With this ruling, Trump’s Liberation Day tariffs — in which the US president levied tariffs as high as 50 per cent on trading partners — were paused, much to the ire of the White House. The ruling also applied to tariffs imposed on Canada, Mexico, and China over their alleged roles in allowing an influx of drugs into the United States.
Later, White House spokesperson Karoline Leavitt told a press briefing: “America cannot function if President Trump, or any other president, for that matter, has their sensitive diplomatic or trade negotiations railroaded by activist judges.”
Trump gets reprieve from appeals court
Shortly after the trade court blocked Trump’s tariffs, the administration appealed the decision in the United States Court of Appeals. The Trump administration said the decision issued by the trade court a day earlier had improperly second-guessed the president and threatened to unravel months of hard-fought trade negotiations. “The political branches, not courts, make foreign policy and chart economic policy,” it said in the filing.
And just 24 hours after the trade court had paused the tariffs, the appeals court granted a temporary reprieve to Trump, allowing for tariffs to be levied for now while the case is litigated. The next hearing is on June 5.
National Economic Council director Kevin Hassett told Fox News the administration is “very pleased with the ruling,” dubbing it a victory.
As Bloomberg reported this shows just how central tariffs are to Trump’s economic vision.
Following the reprieve, Trump posted on Truth Social, “The US Court of International Trade incredibly ruled against the United States of America on desperately needed tariffs but, fortunately, the full 11-judge panel on the US Court of Appeals for the Federal Circuit Court has just stayed the order by the Manhattan-based Court of International Trade. 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?”
In the same post, after lambasting judges, the US president hailed his use of tariffs, saying that “many trillions of dollars have already begun pouring into the USA from other countries, money that, without these tariffs, we would not be able to get”.
Trump thinks of a Plan B for tariffs
With the tariff policy now going down the legal route with some experts noting that the appeals court could eventually uphold the trade court’s original decision to block Trump’s sweeping tariffs, the White House is devising new ways to continue his tariff agenda.
In fact, Trump trade adviser Peter Navarro told reporters: “You can assume that even if we lose [in court], we will do it [tariffs] another way.”
Many speculate that the Trump administration is mulling the use of a never-before-used provision of the Trade Act of 1974 to continue with the levies. This would allow for tariffs of up to 15 per cent for 150 days. This would then buy time for Trump to devise individualised tariffs for each major trading partner under a different provision of the same law, used to counter unfair foreign trade practices, according to the Wall Street Journal.
The other option is Section 338 of the Trade Act of 1930, which allows the administration to impose tariffs of up to 50 per cent on countries that discriminate against the United States.
When asked about the same on Bloomberg TV, Navarro said, “Those are the kinds of thoughts” the economic team is considering. He further indicated that the administration could use the Smoot-Hawley Tariff Act of 1930, which has a provision that allows for tariffs on nations that discriminate against America. The US could also expand the use of tariffs imposed citing national-security concerns.
However, these plans are not without risks. Everett Eissenstat, who served as deputy director of the National Economic Council in Trump’s first term, told the Wall Street Journal, “The administration could quickly turn to other tariff authorities, but doing so while the ruling is under judicial review could be seen as a lack of confidence in the final decision.”
Turmoil for economy
Whatever the situation, it is bound to be chaotic and introduce uncertainty for the US economy. The court process “introduces greater ambiguity around the future direction of US trade policy,” especially because the appeal is ongoing, said EY chief economist Gregory Daco to AFP.
“This legal development amplifies longer-lasting uncertainty for businesses navigating cross-border supply chains,” he added in a note.
KPMG chief economist Diane Swonk also echoed similar views. “The fate of the economy remains precarious even if we avert a recession,” she said on social media.
With inputs from agencies
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