(JD Supra)—The ongoing legal and political saga surrounding President Donald Trump’s tariffs has taken an expected turn following the U.S. Court of International Trade’s surprise ruling earlier this week. A federal appeals court has temporarily lifted a lower court’s block on the most sweeping of Trump’s tariffs, allowing the administration to proceed with certain duties while legal challenges continue. This development is a key step in determining critical issues that will have lasting implications for U.S. trade policy, the authority of the presidency and international trade.
Background: The Tariff Controversy
Since taking office, President Trump has aggressively pursued tariffs on imports from nearly all U.S. trading partners. These tariffs, often announced and adjusted with minimal warning, have been justified by the administration under the International Emergency Economic Powers Act of 1977 (IEEPA). The law allows the president to impose economic sanctions during a national emergency to combat “unusual and extraordinary threats.” Trump has cited trade deficits and the influx of fentanyl as such threats, targeting countries like China, Mexico and Canada.
However, these actions have faced fierce legal opposition. Democratic-led states, small businesses and various advocacy groups have challenged the administration’s authority, arguing that the Constitution grants Congress—not the president—the power to levy taxes and tariffs. They contend that the IEEPA does not provide unilateral authority for the president to impose tariffs, even in the face of valid emergencies.
The Legal Rollercoaster: Recent Rulings
The legal battle reached a critical point when the U.S. Court of International Trade issued an unexpected ruling this week, finding that President Trump had exceeded his authority by invoking the IEEPA to impose broad tariffs. The court ordered an immediate block on these duties, threatening to derail the administration’s trade strategy and upend ongoing international negotiations. See my blog post on this development by clicking here.
The trade court’s three-judge panel emphasized that the power to levy tariffs rests with Congress, not the executive branch. Yet, the Trump administration remained undeterred. Senior officials expressed confidence in prevailing on appeal or finding alternative legal avenues to implement the tariffs. President Trump himself decried the court’s decision as a threat to presidential power, warning that requiring congressional approval for tariffs would fundamentally alter the presidency.
Appeals Court Steps In: Temporary Reprieve for Tariffs
In a swift response, the United States Court of Appeals for the Federal Circuit temporarily stayed the lower court’s ruling. This move reinstated the tariffs while the court considers the government’s appeal, setting a briefing schedule for both sides. The appeals court’s order is a procedural step, but it introduces renewed uncertainty into U.S. trade policy and international negotiations.
The Liberty Justice Center, representing small businesses challenging the tariffs, acknowledged the temporary nature of the stay but remained confident that the courts would ultimately recognize the harm inflicted by the tariffs. These harms include the loss of critical suppliers and customers, costly changes to supply chains, and existential threats to the survival of affected businesses.
Implications for Trade, Business, and the Presidency
The reinstatement of Trump’s tariffs, even temporarily, has immediate consequences:
Trade Policy Uncertainty: The legal back-and-forth has created whiplash in financial markets and complicated negotiations with key trading partners. While some sector-specific tariffs (such as those on steel, aluminum and automobiles) remain unaffected due to separate legal authorities, the broader tariffs are in limbo pending the outcome of the appeals process.
Business Impact: U.S. companies have already incurred billions in lost sales and higher costs due to the tariffs. The uncertainty makes it difficult for businesses to plan, invest and maintain stable supply chains.
Presidential Authority: The case raises fundamental questions about the scope of presidential power in trade matters. If the courts ultimately uphold the lower court’s ruling, it could significantly curtail the executive branch’s ability to unilaterally impose tariffs, shifting more authority back to Congress.
Looking Ahead
The legal battle over Trump’s tariffs is far from over. The appeals court’s temporary stay maintains the status quo for now. As the courts continue to weigh the arguments, businesses, policymakers, and international partners will be watching closely for the next chapter in this high-stakes dispute. In the interim companies must still factor in tariffs, as well as related delay and cost escalation provisions into their contract negotiations and purchase order terms.