President Donald Trump’s aggressive trade agenda hit a significant snag when a federal appeals court ruled that most of his “reciprocal tariffs” are illegal.
The US Court of Appeals for the Federal Circuit held on Friday that Trump overstepped his presidential authority when he imposed levies on virtually every country in the world as part of his April 2 “liberation day” announcement.
Before court action, Trump’s tariffs were set to affect roughly 69 per cent of US goods imports, according to the Tax Foundation. If struck down, the duties would impact just roughly 16pc.
The ruling injects a heavy dose of uncertainty into a central tenet of Trump’s economic agenda, which has rattled the global economy since April.
For now, the appeals court ruling states the duties on goods from most countries – as high as 50pc for a few countries – will stay in effect until October 14, to allow the Trump administration time to appeal the decision to the US Supreme Court.
The appeals court decision affects the “reciprocal tariffs” Trump announced on April 2, as well as levies he had previously imposed on Mexico, Canada and China.
Trump cited the 1977 International Emergency Economic Powers Act to justify his sweeping tariffs. He declared the US’ trade deficit with other nations a national emergency, and invoked IEEPA to impose the steep levies.
The appeals court ruled, however, that IEEPA does not give him authority to implement the tariffs, stating that power resides solely with Congress.
“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said in its 7-4 ruling.
The ruling puts Trump’s levies, which took effect earlier this month after multiple delays, on shaky ground. Trump imposed the tariffs on more than 60 countries, including a 50pc rate on India and Brazil. He also imposed a 10pc baseline tariff on most other countries that were not hit with a specified reciprocal tariff rate.
Trump has said that he will appeal the ruling to the Supreme Court. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote on social media.
If the high court ultimately determines that the tariffs are illegal, there are still other ways for Trump to implement levies, but the scope would likely be much more restricted.
For instance, Trump could invoke the 1974 Trade Act, but that law caps tariffs at 15pc and only for 150 days, unless Congress extends them.
Parts of Trump’s agenda remain safe from the court decision. Most notably, his sector-specific levies on steel and aluminium remain unaffected by the appeals court’s ruling.
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