[If you see this note, it means this tariffs post launched before complete because reasons. Please come back at 7:45 AM EDT for a final version]
The federal Court of International Trade has ruled that the Trump Administration exceeded its authority in levying “emergency” tariffs on virtually every country in the world, as well as in imposing fentanyl-related tariffs on China, Mexico, and Canada. We have embedded a copy of the opinion at the end of the post (hat tip Gordon H).
A U.S. trade court blocked President Donald Trump’s tariffs from going into effect in a sweeping ruling on Wednesday that found the president overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners.
The Court of International Trade said the U.S. Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president’s emergency powers to safeguard the U.S. economy….
The judges also ordered the Trump administration to issue new orders reflecting the permanent injunction within 10 days. The Trump administration minutes later filed a notice of appeal and questioned the authority of the court.
The court invalidated with immediate effect all of Trump’s orders on tariffs since January that were rooted in the International Emergency Economic Powers Act (IEEPA), a law meant to address “unusual and extraordinary” threats during a national emergency.
The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminum, using a different statute.
Additional detail from The Hill:
Wednesday’s ruling blocks Trump’s April 2 “Liberation Day” tariffs, which placed a 10 percent levy on all imports and higher reciprocal tariffs for dozens of countries. It also blocks earlier orders that imposed tariffs on Canada, Mexico and China. Many had been adjusted as or delayed as stocks fell and Treasury yields rose in the wake of Trump’s trade shifts.
The judges gave the Trump administration 10 days to issue any administrative orders needed to effectuate their ruling.
The Administration appealed the ruling Wednesday evening, but the excerpts in The Hill give the impression that it’s a handwave, a mere reassertion of arguments made in the trade court filing.
This reversal comes as Trump is floundering. His approval ratings remain poor, particularly so early in this term.1
Elon Musk has had to abandon DOGE due to blowback to Tesla sales and resulting shareholder demands. Musk has gone from ally to critic, complaining that Trump’s “big beautiful bill” undermines DOGE, just when it barely passed in the House and there’s considerable Senate opposition. For instance, Josh Hawley has just positioned himself as defender in chief of Medicaid, standing against Trump’s planned cuts.
In a potentially bigger blow, Musk, who was a major Trump funder in 2024, says he plans to greatly reduce his political spending. One wonders how many Congresscritters will be prepared to stick their necks out for Trump when his money sources are pulling away.
Similarly, on the Project Ukraine front, Trump has been unable to bring Ukraine or Russia to heel, which is pretty embarrassing given that Ukraine is on US-provided life support. Alexander Mercouris said in his last show that those who know Trump say he wants to wash his hands of the matter and seeks to exit, probably imposes token additional sanctions so as to placate hawks like Lindsey Graham on the way out.
The fact that these two big tariff salvos have been nixed by the court does not mean Trump is bereft of options. We’ll turn to those first. However, the fact that Trump is having to fight for the authority to use tariffs with a bludgeon, will be delayed, and may wind up considerably restricted in their scope and level, reduces both his bargaining leverage and his credibility. There is also the wee question of what happens to the tariffs collected, and the impact on his big beautiful bill and the US deficit if Trump looks less likely to impose broad tariffs. Less tariff revenue means funding needs to come from somewhere else, unless the US deficit is to rise even faster, an outcome Mr. Market, the Fed, many voters, and thus many Congresscritters, view with considerable disapproval.
Trump of course is appealing and seeking an injunction on the court’s order to implement a reversal in ten days. The ruling below strikes me as very tightly reasoned, so I don’t see the odds of it being reversed on appeal as good. If you accept that Congress circumscribed emergency tariff authority in the 1970s in a major dustup with the Nixon Administration (see the discussion of Yoshida
CNBC sets forth some possible Trump’s fallbacks:
Economists at Goldman Sachs said the White House has a few tools at its disposal that could ensure it is only a temporary problem…
The Trump administration does have other legal means of imposing tariffs, however, according to Goldman. These include Section 122 of the Trade Act of 1974, Section 301 and Section 338 of the Trade Act of 1930.
Section 122 does not require a formal investigation and could therefore be one of the swiftest ways to get around the court roadblock.
“The administration could quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122,” analysts at Goldman said. They noted, however, that such a move would only last for up to 150 days after which law requires Congressional action.
Trump could also swiftly launch Section 301 investigations on key U.S. trading partners, laying the bureaucratic groundwork for tariffs, although Goldman said that this process will likely take several weeks at a minimum.
Section 232 tariffs, which are already in place for steel, aluminum and auto imports, could also be broadened to other sectors, while Section 338 allows the president to impose levies of up to 50% on imports from countries that discriminate against the U.S.
Goldman noted that the latter has not been used before.
A right-wing contact claimed that the Trump Administration had already been working on the investigations needed to support other means of deploying tariffs, and had reached for the emergency authority as the fastest way to get out of the box. Given the terrible caliber of Trump’s staff work on the foreign policy and immigration fronts, and that DOGE has been willy-nilly driving out seasoned Federal employees and that Trump has postured as if he is allergic to hiring consultants, one wonders if there are evidentiary baselines that these investigations must meet and whether the Team Trump will satisfy them.
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1 From Yahoo!:
A YouGov/The Economist poll conducted between May 23 and May 26 found that among registered voters, 46% approved of how Trump is handling his job as president, while 52% expressed disapproval.
Among U.S. adults surveyed, 44% approved of how Trump is managing things in the Oval Office, while 52% said they disapproved.
The survey found that Trump’s overall approval rating increased by a percentage point compared to the previous YouGov/The Economist poll, conducted between May 16 and May 19.
In that poll, 45% of registered voters approved Trump’s handling of the presidency and 52% said they disapproved. Among U.S. adults surveyed, 43% expressed approval, while 51% expressed disapproval.