By AFP
May 30, 2025
Walmart warned that it will not be able to absorb all the effects from tariffs - Copyright GETTY IMAGES NORTH AMERICA/AFP/File JUSTIN SULLIVAN
Beiyi SEOW
A US federal appeals court has temporarily halted a ruling that found many of President Donald Trump’s tariffs illegal, but the chance it could ultimately back the original decision looms over the White House.
What is in the US Court of International Trade’s original ruling — which the Trump administration is appealing — and what options does the administration have?
– Which tariffs were affected? –
The three-judge trade court ruled Wednesday that Trump overstepped his authority in imposing blanket tariffs by invoking emergency economic powers.
The judgment — although temporarily halted — affected levies unveiled on April 2, which involve a 10-percent tariff on most trading partners and higher rates on dozens of economies including China and the European Union. These higher levels are currently suspended while negotiations take place.
The ruling also applies to tariffs imposed on Canada, Mexico and China over their alleged roles in allowing an influx of drugs into the United States.
But it left intact sector-specific levies like those on steel, aluminum and auto imports.
– Why a pause? –
The ruling by the little-known court, which has nationwide jurisdiction over tariff and trade disputes, initially gave the White House 10 days to complete the process of unwinding the levies.
But the US Court of Appeals for the Federal Circuit on Thursday granted a temporary stay “until further notice” while the Trump administration’s appeals process plays out.
This means the tariffs can remain in effect for now, while a longer-term outcome is yet to be determined.
National Economic Council director Kevin Hassett told Fox News the administration is “very pleased with the ruling,” dubbing it a victory.
– What are Trump’s alternatives? –
The appeals court could eventually uphold the trade court’s original decision to block Trump’s sweeping tariffs.
The president, however, has other means to reinstate his tariff agenda, said Thibault Denamiel, a fellow at the Center for Strategic and International Studies.
These include Section 122 of the Trade Act of 1974, “which is intended to deal with a balance of payments emergency but does not require a formal investigation,” Denamiel told AFP.
The authority restricts tariffs to 15 percent and they can only last 150 days.
But it is among the policy levers that Trump could pull as he seeks a “bridge” towards more lasting actions, said KPMG chief economist Diane Swonk.
Another option is Section 338 of the Trade Act of 1930, allowing the administration to impose tariffs of up to 50 percent on countries that discriminate against the United States, Denamiel said.
– Does this affect trade talks? –
The US trade court’s ruling did not remove the threat of US tariffs for Europe or end the need for negotiations, said Andrew Kenningham, chief Europe economist at Capital Economics.
This is because the threat of reciprocal tariffs remains if the White House wins its appeal, he said.
Trump could also turn to sector-specific means as he did in his first term or seek congressional approval for tariffs, though this is less likely, Kenningham said.
It is not clear if negotiations will lose steam, Swonk added, given that the administration wants to leverage the threat of tariffs “very aggressively.”
Even if the original ruling is eventually upheld, US officials could still buy time to exert pressure on other economies including the European Union and China.
– What about the broader economy? –
The court process “introduces greater ambiguity around the future direction of US trade policy,” especially because the appeal is ongoing, said EY chief economist Gregory Daco.
“This legal development amplifies longer-lasting uncertainty for businesses navigating cross-border supply chains,” he added in a note.
US stocks closed higher Thursday, but economic fallout has already occurred in recent months with Trump’s see-sawing approach to unveiling tariffs and pausing them selectively.
Financial markets have been roiled by policy shifts, and shipping halts due to high tariffs bring disruptions that cannot be cleared overnight, analysts said.
“The fate of the economy remains precarious even if we avert a recession,” Swonk said on social media.
Op-Ed: Tariffs vs government powers — The courts will win eventually.
By Paul Wallis
By Paul Wallis
DIGITAL JOURNAL
May 29, 2025
The administration of US President Donald Trump has argued that judges do not have the authority to block his tariffs regime - Copyright AFP/File Brendan SMIALOWSKI
A government can only pass laws if it’s empowered under a constitution. The Trump administration is raising tariffs under the Emergency Powers Act. The tariffs were initially blocked by a Federal appeals court but have been allowed to continue by another federal appeals court.
The original court finding was that the president cannot unilaterally impose tariffs, and that tariffs have to be approved by Congress. The appeals court has said that tariffs can continue under the emergency powers legislation for now.
The administration has stated that the US “cannot function” with constant blocking by the courts. That’s almost funny. It’s not functional due to the self-inflicted problems the administration created for itself. The administration has also been monotonously losing very large numbers of critical court cases.
There are more than a few major issues here. Bad policy is the main reason:
What’s the emergency? Trade deficits? The fact that the US outsourced all its own manufacturing 30 years ago? The US trade deficit position is a result of unbelievably myopic business deals, not foreign countries. The whole premise of these tariffs is effectively fake to the bone.
The US economy does not depend on buying iPhones and toasters. A trade deficit is a number, not an instant analysis of real trade and business. It’s not even competent accountancy.
Main Street businesses are dependent on disposable income, which is already under lethal stress due to cost-of-living increases. Raising prices with added tariffs will make things much worse.
US revenue will not achieve much, if anything, with tariffs anyway. The current 2025 budget includes raising the debt ceiling by $4 trillion in the next year or so. That indicates that the tariffs aren’t expected to deliver revenue.
Critically – All 50 US states have been left high and dry and without direction solely because of erratic edicts from Washington. California is taking multiple hits to its economy as shipping dries up and the agricultural sector loses business as a direct result of the tariffs. These factors alone will have a direct impact on the shelves nationwide.
Politically, the tariffs have been an ongoing disaster for the administration, antagonizing trading partners, causing imports and exports to reposition, and baffling US importers.
Imports have declined, notably from Canada and China. The net impact on US domestic trade hasn’t yet been quantified, but the outlook is very blurry.
More expensive goods will lead to a black market pulling money out of the economy in huge volumes. The cartels might move into groceries instead.
US courts have been put into overdrive by the sheer number and scope of lawsuits the tariffs have created.
Let’s keep this simple.
The legal black hole arises from this administration’s constant totally avoidable conflict with existing laws.
If trade collapses due to tariffs, the Federal revenue base will be obliterated and even the very rich will be hit extremely hard, perhaps for years. Capital assets can devalue overnight, as with the market crash earlier this year.
If big businesses lose revenue due to trade shortfalls, their credit balances, many of which are already huge, will be nuked. Debt will skyrocket.
As we’ve seen, just one contrary court decision can totally derail national policy. Imagine another four years of that.
Now try and convince the rest of the world you’re not out of your minds. It won’t be easy.
__________________________________________________
Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
May 29, 2025
The administration of US President Donald Trump has argued that judges do not have the authority to block his tariffs regime - Copyright AFP/File Brendan SMIALOWSKI
A government can only pass laws if it’s empowered under a constitution. The Trump administration is raising tariffs under the Emergency Powers Act. The tariffs were initially blocked by a Federal appeals court but have been allowed to continue by another federal appeals court.
The original court finding was that the president cannot unilaterally impose tariffs, and that tariffs have to be approved by Congress. The appeals court has said that tariffs can continue under the emergency powers legislation for now.
The administration has stated that the US “cannot function” with constant blocking by the courts. That’s almost funny. It’s not functional due to the self-inflicted problems the administration created for itself. The administration has also been monotonously losing very large numbers of critical court cases.
There are more than a few major issues here. Bad policy is the main reason:
What’s the emergency? Trade deficits? The fact that the US outsourced all its own manufacturing 30 years ago? The US trade deficit position is a result of unbelievably myopic business deals, not foreign countries. The whole premise of these tariffs is effectively fake to the bone.
The US economy does not depend on buying iPhones and toasters. A trade deficit is a number, not an instant analysis of real trade and business. It’s not even competent accountancy.
Main Street businesses are dependent on disposable income, which is already under lethal stress due to cost-of-living increases. Raising prices with added tariffs will make things much worse.
US revenue will not achieve much, if anything, with tariffs anyway. The current 2025 budget includes raising the debt ceiling by $4 trillion in the next year or so. That indicates that the tariffs aren’t expected to deliver revenue.
Critically – All 50 US states have been left high and dry and without direction solely because of erratic edicts from Washington. California is taking multiple hits to its economy as shipping dries up and the agricultural sector loses business as a direct result of the tariffs. These factors alone will have a direct impact on the shelves nationwide.
Politically, the tariffs have been an ongoing disaster for the administration, antagonizing trading partners, causing imports and exports to reposition, and baffling US importers.
Imports have declined, notably from Canada and China. The net impact on US domestic trade hasn’t yet been quantified, but the outlook is very blurry.
More expensive goods will lead to a black market pulling money out of the economy in huge volumes. The cartels might move into groceries instead.
US courts have been put into overdrive by the sheer number and scope of lawsuits the tariffs have created.
Let’s keep this simple.
The legal black hole arises from this administration’s constant totally avoidable conflict with existing laws.
If trade collapses due to tariffs, the Federal revenue base will be obliterated and even the very rich will be hit extremely hard, perhaps for years. Capital assets can devalue overnight, as with the market crash earlier this year.
If big businesses lose revenue due to trade shortfalls, their credit balances, many of which are already huge, will be nuked. Debt will skyrocket.
As we’ve seen, just one contrary court decision can totally derail national policy. Imagine another four years of that.
Now try and convince the rest of the world you’re not out of your minds. It won’t be easy.
__________________________________________________
Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
No comments:
Post a Comment