Brisbane, Sep 2 (The Conversation) Trading partners of the United States are now grappling with a fresh wave of uncertainty following a ruling from a US federal appeals court, which deemed President Donald Trump’s “reciprocal” tariffs as illegal. In a 7-4 decision, the judges concluded that Trump exceeded his powers by using emergency powers to impose indefinite tariffs on almost all goods from nearly every country. This decision upholds an earlier court ruling and could disrupt strategies for trading partners still in negotiations with the US, likely causing them to adopt a wait-and-see approach regarding the legal proceedings.
The next step is the Supreme Court, according to Trump. The US Court of Appeals for the Federal Circuit allowed the tariffs to remain in effect until October 14 to permit further appeals. The ruling has also highlighted the testing of executive powers under the 1977 International Emergency Economic Powers Act (IEEPA). Trump’s use of this act to levy tariffs has raised questions about executive authority. For now, it appears the administration has overstepped, as the judges emphasized that taxation powers reside with Congress, invoking Article 1, Section 8, of the US Constitution. The judges highlighted that allowing such power to the President could effectively diminish Congressional control over taxation.
Currently, the “liberation day” tariffs, although declared illegal, will temporarily remain in place. Revenue continues to be collected based on the challenged executive orders, and if the tariffs are ultimately deemed unlawful, those funds might need to be returned. This ruling does not encompass all tariffs, specifically excluding those on aluminium and steel sectors. Various tariffs implemented during Trump’s first term have also been ruled illegal under World Trade Organisation guidelines and are in the appeal process through the multilateral dispute settlement system.
The ruling won’t change the suspension of the de minimis exception, which caused global shipping disruptions. However, should the decision be upheld, tariffs on low-value goods will revert to pre-“liberation day” levels, often returning to zero.
Initially, trading partners reacted with alarm to Trump’s erratic tariff policies. Many rushed to reach deals with his administration. However, with the legal status of these tariffs uncertain, it may be pragmatic for governments to await the outcome of the US legal processes before entering any new agreements. Businesses face continued uncertainty as the courts might invalidate the tariffs, compelling their revocation. Nevertheless, Congress could opt to reimpose them through new legislation, or Trump could explore alternate legal strategies.
As the administration considers an appeal to the Supreme Court, the critical issue isn’t solely about tariffs but rather the enduring support of the separation of powers enshrined in the US Constitution. The appeals court’s decision challenges the claim that the IEEPA supports extensive tariffs akin to those introduced as “liberation day” tariffs. While the act permits the president to “regulate importation,” the court saw this as insufficient to justify such extensive authority. Though prior arguments of this nature have been dismissed by the Supreme Court, it remains to be seen if this will establish a precedent.
The Supreme Court's conservative majority comprises six Republican-appointed justices, including three appointed during Trump’s presidency. With precedents already set granting presidential immunity under certain conditions, a decision favoring these broad tariffs could edge the US closer to resembling a monarchy in terms of executive power. (The Conversation) GRS GRS
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