A US federal appeals court has ruled that wide-ranging tariffs imposed by Donald Trump can remain in effect while the appeals process unfolds. This decision, announced by Trump as a "great victory" for the United States, is not a final verdict and the tariffs' continuation may only be temporary.
The Court's Ruling
The Court of Appeals for the Federal Circuit in Washington sided with the Trump administration's request to suspend a lower court's ruling. The lower court had previously found that the former president exceeded his authority in imposing tariffs under the International Emergency Economic Powers Act (IEEPA), typically reserved for national security-related sanctions rather than broad trade policy.
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The decision concerns the 10% tariffs levied in April on nearly all countries, along with higher rates on nations with which the US maintains a trade deficit, including China, Canada, and Mexico. These tariffs were intended to exert pressure on trade partners to address illegal immigration and and the trafficking of synthetic opioids across the US border.
Next Steps
The court deemed the case to be of "exceptional importance" and has expedited proceedings, setting a hearing for July 31. Until then, the tariffs will remain in place, with any potential changes dependent on the court's ultimate resolution.
Market Reaction
Donald Trump promptly hailed the decision as a success, asserting that "the United States can use tariffs to protect itself." Critics, however, point to significant market disruption caused by the tariffs, which have hampered businesses and impacted global trade.
It's worth noting that the earlier lower court ruling had asserted that the US Constitution grants Congress, not the president, the authority to impose tariffs. The Trump administration has indicated it is preparing alternative legal solutions should it ultimately lose the case.
The court's decision emerged after 2:00 AM CET, with Trump's comments following just before 1:00 PM CET. Early market reaction was subdued, although US500 futures saw a slight dip, testing the 6020 point level in early trading. Currently, just ahead of the CPI inflation release, the index stands around 6030 points, having tested 6050 points yesterday.
