WASHINGTON (AP) – A federal court on Wednesday blocked President Donald Trump’s impactful customs duties tied to the Emergency Act, causing turbulence in global financial markets, frustrating trading partners, and raising concerns about inflation and potential economic collapse stemming from his signature economic policies.
The ruling from a three-judge panel at the New York-based US International Trade Court followed multiple lawsuits claiming that Trump’s “liberation day” tariffs exceeded his authority and rendered the country’s trade policy subject to his personal discretion.
Trump has consistently asserted that tariffs will compel manufacturers to return jobs to the US, generating sufficient revenue to alleviate the federal government’s budget deficit. He utilized this strategy as a bargaining chip to encourage other countries to engage in negotiations favorable to the United States.
White House spokesman Kush Desai expressed that the trade deficit “represents a national emergency that has devastated American communities, marginalized workers, and weakened our defense industrial base.”
The administration is “dedicated to leveraging every executive power available to address this crisis and restore America’s strength,” he added.
However, for the moment, Trump might lack the leverage of import taxes to achieve his goals. It remains uncertain whether the White House will react to the ruling by temporarily suspending all emergency power tariffs.
Trump could temporarily enforce a 150% import tax for 150 days on countries where the US maintains a significant trade deficit. The ruling indicates that the President can exercise this power under Section 122 of the Trade Act of 1974.
The ruling served as a definitive repudiation of Trump’s signature initiative during his second term and challenged the legal foundations of some of his most contentious actions. The administration promptly filed a notice of appeal, and it is likely that the Supreme Court will be asked to provide a final decision, but it represents a significant setback.
The case was reviewed by three judges: Timothy Reif, appointed by President Trump; Jane Restoni, appointed by President Reagan; and Gary Katzman, appointed by President Obama.
“The global and retaliatory customs orders exceed the authorities granted to the President by the IEEPA to regulate imports through tariffs,” the court stated, referencing the International Emergency Economic Powers Act of 1977.
The ruling utilized his Section 232 powers from the Trade Expansion Act of 1962 to implement the tariffs introduced by Trump, which includes a 25% tax on most imported vehicles and components produced with foreign steel and aluminum. These tariffs were based on a Department of Commerce investigation that identified national security risks associated with imported products.
It was filed in the US Court of International Trade, a federal court that specifically adjudicates civil litigation, including matters related to international trade law.
Typically, tariffs require Congressional approval; however, Trump contends he has the authority to act to rectify the trade deficit, which he deems a national emergency.
He is currently facing at least seven lawsuits challenging the tariffs, with the plaintiffs arguing that the Emergency Powers Act does not permit the imposition of customs duties. Furthermore, they maintain that the trade deficit is not an emergency, given that the US has experienced a trade deficit for 49 consecutive years.
Trump has implemented tariffs on most countries globally to address America’s substantial and enduring trade deficits. He previously imposed taxes on imports from Canada, China, and Mexico, aiming to combat illegal immigration and the influx of synthetic opioids across US borders.
His administration argues that the court endorsed the emergency use of tariffs by then-President Richard Nixon in 1971 and asserts that only Congress, not the court, can determine the “political” issues surrounding the legality of the president’s rationale for declaring a state of emergency.
The tariffs associated with Trump’s release day have rattled global financial markets and prompted many economists to downgrade the outlook for US economic growth. However, so far, the tariffs appear to have minimal impact on the world’s largest economy.
A lawsuit was initiated by a coalition of small businesses, including wine importers and VOS Selection.
Dozens of states, led by Oregon, have also filed lawsuits. “This ruling reinforces that our laws matter, and trade decisions cannot be made at the president’s whim,” Attorney General Dan Layfield remarked.
Oregon Senator and leading Democrat on the Senate Treasury Committee noted that the tariffs “inflated the prices of groceries and cars, threatening shortages of essential goods for American businesses, both large and small, along with disrupting supply chains.”
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Contributors to this story include Associated Press writers Zeke Miller and Paul Wiseman.
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This story has been updated by Katzman in previous versions to correct the spelling of Judge Gary Katzman’s last name.
Source: apnews.com