Source: Al Jazeera

Federal Appeals Court Temporarily Reinstates Trump’s Tariffs After Lower Court Block

Washington, D.C. – In a significant development in President Donald Trump’s ongoing trade agenda, the U.S. Court of Appeals for the Federal Circuit has temporarily reinstated a series of sweeping tariffs imposed by the Trump administration. This decision comes just a day after the U.S. Court of International Trade ruled that the tariffs, enacted under the International Emergency Economic Powers Act (IEEPA), exceeded the president’s authority and ordered their immediate suspension. The appeals court’s administrative stay, issued on Thursday, May 29, 2025, allows the tariffs to remain in effect while legal proceedings continue, providing a temporary reprieve for the administration’s controversial trade policy.

Background of the Tariff Dispute

On April 2, 2025, dubbed “Liberation Day” by the White House, President Trump announced a 10% tariff on imports from nearly all U.S. trading partners, alongside higher “reciprocal” tariffs on goods from over 60 countries. Additional 25% tariffs were imposed on Canada, Mexico, and China, citing issues such as fentanyl trafficking and trade imbalances. These measures were justified under the IEEPA, a 1977 law that grants the president authority to regulate commerce during national emergencies. The administration argued that persistent U.S. trade deficits and drug trafficking constituted such emergencies, necessitating the tariffs to protect American industries and workers.

However, on Wednesday, May 28, 2025, a three-judge panel from the U.S. Court of International Trade, consisting of judges appointed by Presidents Ronald Reagan, Barack Obama, and Trump himself, ruled unanimously that the IEEPA did not grant the president “unbounded authority” to impose such broad tariffs. The court found that the tariffs, including the 10% global levies and specific duties on Canada, Mexico, and China, were not directly tied to addressing the cited emergencies, such as fentanyl trafficking. The ruling declared the tariffs illegal and issued a permanent injunction, ordering the administration to halt their collection within 10 days.

The decision was celebrated by critics of Trump’s trade policy, including a coalition of small businesses and 12 Democratic-led states that filed lawsuits against the tariffs. Nevada Attorney General Aaron Ford called the ruling “a win for the rule of law and for Nevadans’ pocketbooks,” highlighting the potential economic damage from the tariffs, which have cost companies over $34 billion in lost sales and higher costs, according to a Reuters analysis.

Appeals Court Intervention

Following the trade court’s ruling, the Trump administration swiftly appealed to the U.S. Court of Appeals for the Federal Circuit, seeking an immediate stay to prevent the injunction from taking effect. On Thursday afternoon, the appeals court granted an “administrative stay,” temporarily pausing the lower court’s order while it considers the government’s request for a longer-term pause. The court directed plaintiffs, including small businesses and state attorneys general, to respond to the administration’s motion by June 5, 2025, with the government’s reply due by June 9, 2025.

The appeals court’s decision consolidates two related cases—one brought by the Liberty Justice Center on behalf of five U.S.-based companies and another by 12 states—ensuring a unified legal process. The temporary stay restores the tariffs, including the 10% global tariffs, the paused reciprocal tariffs, and the 25% duties on Canada, Mexico, and China, pending further judicial review.

Reactions and Implications

The reinstatement of the tariffs has sparked varied reactions. White House spokesperson Kush Desai described the appeals court’s stay as “a positive development for America’s industries and workers,” emphasizing the administration’s commitment to addressing trade deficits and drug trafficking through “every legal authority conferred to the President in the Constitution and by Congress.” President Trump, in a post on Truth Social, expressed relief at the stay but criticized the trade court’s ruling as “so wrong, and so political,” questioning whether the judges’ decision was motivated by “hatred of ‘TRUMP.’” He notably omitted that one of the judges, Timothy M. Reif, was his own appointee in 2019.

Financial markets, which had rallied on Wednesday following the trade court’s ruling, showed a more muted response to the appeals court’s stay. The S&P 500 and European stocks saw modest gains, while the U.S. dollar strengthened against currencies like the euro and yen. Analysts suggest that the ongoing legal uncertainty may temper market reactions, with investors anticipating that the administration may seek alternative legal avenues to maintain its tariff regime if the appeal fails.

Critics of the tariffs, including Jeffrey Schwab of the Liberty Justice Center, remain confident that the Federal Circuit will ultimately uphold the trade court’s ruling. Schwab called the stay “merely a procedural step” and argued that the tariffs represent “a direct threat” to the livelihoods of small businesses. Canadian Prime Minister Mark Carney welcomed the initial trade court ruling, stating it aligned with Canada’s view that the tariffs were unlawful, though he noted the uncertainty introduced by the appeals process.

Alternative Legal Pathways and Future Outlook

The Trump administration has indicated it may pursue other legal mechanisms to sustain its trade agenda if the IEEPA-based tariffs are struck down. Analysts at Goldman Sachs pointed to options such as Section 122 of the Trade Act of 1974, which allows tariffs of up to 15% for 150 days, or Section 338 of the Trade Act of 1930, which permits tariffs up to 50% on countries discriminating against U.S. trade. Section 232 of the Trade Expansion Act of 1962, already used for tariffs on steel, aluminum, and automobiles, could also be expanded to other sectors. Trump’s trade adviser, Peter Navarro, told reporters, “You can assume that even if we lose [in court], we will do it another way,” signaling the administration’s determination to maintain its trade policy.

The legal battle is widely expected to escalate to the U.S. Supreme Court, particularly given the administration’s threat to seek emergency relief if the appeals court does not grant a longer stay. Legal experts, including Ilya Somin of George Mason University, argue that the trade court’s ruling is grounded in constitutional principles, particularly the allocation of tariff authority to Congress under Article I. Somin and others cite doctrines like the major questions doctrine and nondelegation doctrine, which could bolster the case against the tariffs if it reaches the Supreme Court.

Economic and Global Impact

Trump’s tariffs have been a cornerstone of his economic strategy, aimed at reducing trade deficits, boosting domestic manufacturing, and raising revenue. The administration claims the tariffs could generate over $1 trillion, though economists warn they may increase consumer prices and contribute to inflation, with an effective tariff rate estimated at 6.5% by Capital Economics. The tariffs have disrupted global supply chains, rattled financial markets, and strained relations with trading partners, with countries like Japan and the European Union hesitant to finalize trade deals amid the uncertainty.

The appeals court’s temporary stay provides breathing room for the Trump administration as it navigates ongoing trade negotiations and legal challenges. However, the broader implications for U.S. trade policy, global commerce, and consumer prices remain uncertain as the case progresses. With deadlines for legal filings set for early June, the nation and its trading partners await further clarity on whether Trump’s tariffs will withstand judicial scrutiny or face permanent dismantling.

Sources: Reuters, The New York Times, CBS News, The Washington Post, BBC News, Fox Business, The Guardian, AP News, NBC News, CNN Business, Bloomberg, TIME, ABC News, Axios, Newsweek, NPRweb:0-24post:0-7