WASHINGTON – All eyes − from foreign leaders to market watchers to business leaders − were on President Donald Trump after a federal court overturned most of the tariffs he imposed to negotiate trade agreements with countries around the world.
The Court of International Trade ruled May 28 that Trump didn’t have the authority under the legislation and emergency he cited April 2 to impose the tariffs on imports. Following an uproar, Trump paused most of the tariffs for 90 days to hammer out trade deals with specific countries.
But the court’s decision, which government lawyers immediately appealed to the U.S. Court of Appeals for the Federal Circuit, removes the leverage Trump sought to bring countries to the negotiating table.
Here’s what to know about the ruling against Trumps tariffs:
Despite tariff ruling, White House says 3 trade deals nearly done
White House economic adviser Kevin Hassett told Fox Business News that three trade deals were nearly done and he expected more despite the trade court’s ruling.
“There are many, many deals coming. And there were three that basically look like they’re done,” Hassett said May 29.
Hassett dismissed the court ruling as the work of “activist judges.”
“If there are little hiccups here or there because of decisions that activist judges make, then it shouldn’t just concern you at all, and it’s certainly not going to affect the negotiations,” Hassett said.
Peter Navarro, a Trump trade adviser, told Bloomberg Surveillance that courts “are basically engaged in attacks on the American people” but that the administration had other options for pursuing tariffs.
“Nothing has really changed here in that sense,” Navarro said. “We’re still as we speak are having countries call us and tell us they want a deal. So these deals are going to happen.”
Trump contends on-and-off tariffs part of negotiations
Trump has argued high tariffs brought reluctant trading partners to the negotiating table for trade deals after decades of taking advantage of the U.S.
The 145% tariffs Trump initially imposed on China nearly halted trade between the countries, and they reached an agreement May 12 to lower tariffs to 30% while negotiations continue. Likewise, Trump threatened Europe with 50% tariffs but agreed to postpone the start to July 9 for more talks.
Trump said the start-and-stop tariffs were part of trade negotiations. He denied being afraid to impose harsh tariffs, as a Wall Street skepticism about the import taxes under the acronym TACO for “Trump always chickens out.”
“You call that chickening out?” Trump told reporters May 28. “It’s called negotiation.”
Markets open up on court ruling overturning tariffs
Wall Street stock index futures rose by more than 1.5% before trading began May 29. The U.S. dollar rallied 0.2% against the yen and 0.3% against the Swiss franc as currencies and assets that have benefited from the tariff-induced market turmoil fell.
But markets have swung wildly through Trump’s on-and-off tariff changes. The S&P 500 index is up 3.8% since they were announced, European stocks are up 2.2% and China’s benchmark indexes are nearly flat.
Charu Chanana, chief investment strategist at Saxo in Singapore, said the ruling minimizes the most pessimistic outlooks on growth.
“Trump may still have scope to appeal or impose narrower, sector-specific tariffs, so policy uncertainty lingers,” Chanana said. “Businesses still don’t have clarity, and the policy path remains fluid.”
Steve Wyett, chief investment strategist for BOK Financial, said the ruling wasn’t unexpected and will be appealed. But Trump has other options for imposing the announced tariffs than under the International Emergency Economic Powers Act, which is what the president cited and the court overturned.
“This does not mean we are going back to where we were as tariffs remain an important part of President Trump’s economic plan,” Wyett said. “But the urgency for trade deals is reduced and the ultimate level of tariffs is lower than before.”
Oil prices rose after the court blocked tariffs but remained wary of potential U.S. sanctions curbing Russian crude flows. Brent crude futures were up 19 cents, or 0.3%, to $65.09 a barrel.
“Markets are positive since Donald Trump got the setbacks on the tariffs,” said Bjarne Schieldrop, chief commodities analyst at SEB. “That’s less headwind for the global economy, so more demand for oil because the machine of the global economy moves better and faster.”
Judges on Court of International Trade considered experts on tariffs
The Court of International Trade halted Trump’s tariffs by ruling the 1977 International Emergency Economic Powers Act “does not authorize” the taxes on imports.
Government lawyers had argued the statute’s authorization to regulate importation meant Trump could impose tariffs, but the court disagreed.
Brett Shumate, a Justice Department lawyer, argued in another lawsuit against the tariffs May 27 that a U.S. District Court should transfer the case involving a toy importer to the Court of International Trade because of the expertise of those judges.
“If the court were to conclude otherwise, granting an injunction would kneecap the president on the world stage, cripple his ability to negotiate trade deals and imperil the government’s ability to respond to future national emergencies,” Shumate said. “Granting any form of relief against the president under IEEPA tariffs would be catastrophic for our national security and foreign policy.”
Ilya Somin, one of the lawyers against Trump in the case and a scholar at the libertarian Cato Institute, said it was “great to see that the court unanimously ruled against this massive power grab by the president.”
“The ruling emphasizes that he was wrong to claim a virtually unlimited power to impose tariffs, that IEEPA law doesn’t grant any such boundless authority, and that it would be unconstitutional if it did,” Somin said.
U.S. trading partners in Europe, Asia remain mum about tariff ruling
Some of the largest U.S. trading partners remained mum about the prospects for new deals.
One exception was Canada’s Prime Minister Mark Carney, who told the House of Commons on May 29 that the ruling “is consistent with Canada’s longstanding position” that the “tariffs were unlawful as well as unjustified.”
Leaders of the European Commission and Germany each said they couldn’t comment.
“Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs – which can’t exceed 15% for the time being,” said George Lagarias, chief economist at Forvis Mazars international advisers.
Contributing: Reuters
This article originally appeared on USA TODAY: Trump to appeal court’s ruling overturning most tariffs: What to know
