Donald Trump’s use of tariffs has faced a major legal challenge. The former US President’s imposition of tariffs has created difficulties for his own policies. Trump had asserted that he possessed the authority to levy tariffs on foreign goods without Congressional approval. However, a federal appeals court has now ruled against this claim. The court’s interpretation is that the Constitution grants the power to impose tariffs to Congress, but over time, presidents have gained more control. The court decided that Trump exceeded his authority by invoking a national emergency to justify tariffs on numerous countries. This decision validates the previous ruling from the Special Federal Trade Court in New York.
The court’s decision represents a significant setback for Trump, exacerbating the uncertainty surrounding his trade policies. The economic consequences include instability in financial markets, business stagnation, price hikes, and growing concerns about a possible economic slowdown. The court’s ruling pertains to the tariffs that Trump imposed in April on almost all US trading partners.
The Trump administration had presented the argument that former US President Richard Nixon had been permitted to utilize emergency powers for tariff imposition during an economic crisis. The court responded by pointing out that Nixon acted in this manner when he ended the gold standard. The US International Trade Court in New York determined that Trump’s actions were outside the scope of presidential powers under emergency authority.
There was some disagreement among the judges regarding the court’s Friday decision. The court clarified that the 1977 legislation did not authorize emergency measures. The government warned that eliminating Trump’s tariffs would necessitate the return of the tariffs collected from multiple nations. The government noted that July’s revenue totaled $159 billion, representing a doubling of the previous year’s revenue. The Justice Department cautioned in a legal argument that removing tariffs could result in financial turmoil and hamper Trump’s future ability to impose tariffs.
Trump has long labeled the US trade deficit a national emergency. Trump declared, without Congressional approval, that he had implemented these tariffs under the 1977 International Emergency Economic Powers Act, claiming it was in the best interests of the nation. The court said that the US Constitution reserves the power to set taxes, including tariffs, to Congress, but lawmakers have gradually increased presidential authority over tariffs. The court noted that Trump fully exploited this.
Following the announcement of tariffs, Trump delayed them for 90 days to give countries time to negotiate trade agreements with the US. While some nations, like the UK, Japan, and the European Union, accepted the move, others did not. Trump imposed additional tariffs on those countries earlier this month, including Laos (40%), India (50%), and Algeria (30%).