US President Donald Trump can keep collecting import taxes for now, an appeals court has said, a day after a trade ruling found the bulk of his global tariffs to be illegal.
A federal appeals court granted a bid from the White House to temporarily suspend the lower court’s order, which ruled that Trump had overstepped his power by imposing the duties.
Wednesday’s judgement from the US Court of International Trade drew the ire of Trump officials, who called it an example of judicial overreach.
Small businesses and a group of states had challenged the measures, which are at the heart of Trump’s agenda and have shaken the world economy.
In its appeal, 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.
Shortly before Thursday’s tariff reprieve from the appeals court, 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 blasted the international trade court’s ruling on Thursday in a social media post, writing: “Hopefully, the Supreme Court will reverse this horrible, Country threatening decision, QUICKLY and DECISIVELY.”
Wednesday’s ruling by the little-known trade court in New York would void tariffs imposed by Trump in February on goods from China, Mexico and Canada, which he justified as a move intended to address a fentanyl smuggling.
The lower court’s decision would also dismiss a blanket 10% import tax that Trump unveiled last month on goods from countries around the world, together with higher so-called reciprocal tariffs on trade partners, including the EU and China.
The 1977 law Trump invoked to impose many of the tariffs, the International Emergency Economic Powers Act, did not allow for such sweeping levies, the lower court said.
But its ruling did not affect Trump’s tariffs on cars, steel and aluminium, which were implemented under another law.
The White House has suspended or revised parts of many of its duties while trade negotiations grind on.
But the appeals court decision allow the tariffs to be used for now while the case is litigated. The next hearing is on 5 June.
Another federal court overseeing a separate tariffs case reached a similar conclusion on Thursday to the trade court.
Judge Rudolph Contreras found the duties went beyond the president’s authority, but that ruling only applied to a toy company in the case.
What happens next?
Trump trade adviser Peter Navarro told reporters on Thursday: “You can assume that even if we lose [in court], we will do it [tariffs] another way.”
No court has struck down tariffs on cars, steel and aluminium that Trump imposed citing national-security concerns under Section 232 of the Trade Expansion Act of 1962.
He could expand import taxes under that law to other sectors such as semiconductors and lumber.
The president could also invoke Section 301 of the Trade Act of 1974, which he invoked for his first-term tariffs on China.
A separate 1930 trade law, Section 338 of the Trade Act, which has not been used for decades, allows the president to impose tariffs of up to 50% on imports from countries that “discriminate” against the US.
But the White House seems more focused for now on challenging the court rulings. The matter may is widely expected to end up at the Supreme Court.
‘Power grab’
Lawyer Ilya Somin, who helped work on the case brought by businesses before the trade court, said he was “guardedly optimistic” the ruling would ultimately be upheld on appeal.
He noted that the trade court order came from justices appointed by both Democratic and Republican presidents, including one by Trump himself.
“It’s not normal for the president of the United States to make such an enormous power grab and start the biggest trade war since the Great Depression,” he said.
But Terry Haines, founder of the Pangaea Policy, which advises firms on Washington policies, said he thought “the president is probably going to be given the benefit of the doubt” by the courts.
Business owners, while expressing hope, said they did not yet feel like the situation was resolved.
“I was incredibly happy and relieved but I’m also still very cautious,” said Kara Dyer, the owner of Boston-based Story Time Toys, which makes toys in China and imports them to the US for sale.
“It’s just been so chaotic and so impossible to plan as a business,” she said.
“I want this to work its way through our court system so we have a little bit more certainty about what tariffs will be in the future.”
Dmitry Grozoubinski, a former trade negotiator who represented Australia at the World Trade Organization, said the court battle had weakened Trump’s ability to use the duties for leverage over other countries.
“It will be a lot harder for him to raise tariffs in the future,” he said.
“This was ultimately a negotiation in which President Trump was threatening other countries with a big stick and that stick just got considerably more ephemeral.”
With reporting from the BBC’s World Business Report and Opening Bell.
