Biggest threat to Trump's tariffs comes from within
“It is not for unelected judges to decide how to properly address a national emergency," fumed the White House today after a US federal court blocked Donald Trump’s sweeping set of tariffs, in a humiliating blow to the US President’s signature economic policy.
The Court of International Trade has ruled that the US President’s imposition of tariffs was illegal and given the White House ten days to formally reverse them. This includes his 10 per cent baseline tariffs as well as the steeper “reciprocal” tariffs due to take effect in July, though steel and aluminium tariffs are not affected as they fall under a different law.
The Trump administration says it will go to the Supreme Court on Friday to halt this “legally indefensible” action, unless an appeals court agrees to immediately block today’s ruling from “activist judges”.
What is the legal basis of today’s case?
The Manhattan-based Court of International Trade has essentially accused the US President of misusing emergency powers.
According to America’s constitution, trade policy is the domain of Congress.
Yet Trump imposed his sweeping set of tariffs through an executive order, without seeking congressional approval, by using an emergency law. The International Emergency Economic Powers Act of 1977 grants presidents broad authority to respond to extraordinary threats that originate outside the US. Attempting to remedy a trade deficit, the judges argued, does not constitute a suitable “emergency”, meaning Trump has overstepped his authority.
Now, it’s up to the appeals court and Supreme Court to decide if Trump acted unconstitutionally.
The US President has an experienced team of trade lawyers - including US Trade Representative, Jamieson Greer - and he is not going to back down without a fight. It’s worth noting too that there is a law passed by Congress in 1974 giving presidents authority to impose 15% tariffs for 150 days in cases of “large and serious” trade deficits and unfair trade practices. And, while Trump bypassed Congress before, he may be able to get them on side.
Even so, today’s ruling casts major doubt over whether the currently-paused “reciprocal” tariffs will ever come into effect, meaning it threatens to unwind months of diplomatic negotiations.
At a crunch moment in America’s bilateral trade talks with China, Japan, the EU and India, today’s ruling has totally removed the so-called master of the deal’s leverage.
No country will be in the mood to make big concessions to Washington when tariffs may not even go ahead anyway.
Ongoing negotiations will likely be put on hold while this domestic legal battle plays out.
There is an irony that the biggest obstacles to Trump’s protectionist trade policy have, so far, come from within America: first a backlash from the US bond markets, and now from the country’s own courts.
Caitlin Allen
Deputy Editor
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