In the last 48 hours, the U.S. courts have become the main obstacle and restraint to the global tariff offensive that has been unsettling markets and economies worldwide. However, the recent events have left all trading partners of the world's leading power uncertain about what is in effect and what will happen next.
The U.S. Court of Appeals for the Federal Circuit overturned on Thursday at noon, Washington time, the suspension of Donald Trump's tariffs decreed the day before by the U.S. Court of International Trade, the specialized court in customs and foreign trade issues that overturned most of the levies imposed in March and April.
This is not a final decision, but a temporary one, in response to the urgent precautionary measures requested by the White House, which believes that the Wednesday night ruling by a panel of veteran judges, one appointed by Ronald Reagan and another by Trump himself, "would cause significant and irreparable harm to the National Security of the U.S. and its foreign policy." The administration threatens to appeal to the Supreme Court on Friday, which will likely have to eventually rule on the matter and settle the debates.
However, this higher appeals court has not yet addressed the substantive issue nor made a decision. It has simply temporarily paused the suspension and ordered the plaintiffs in the case to present their arguments by June 5 and the administration by June 9 to decide on the precautionary measures. The final review of the sentence will take longer. Furthermore, another court in the capital has halted another series of tariffs on China, listening to the arguments of an affected company, adding more complexity and anticipating further individual lawsuits.
"Where did these three initial judges come from? How could they have caused so much harm to the United States? Is it simply hatred for "TRUMP"? What other reason could there be?," wrote the president hours later, blaming the Federalist Society, a conservative group that has spent tens of millions of dollars over the past decades to place judges of their ideology in key courts, including the Supreme Court.
"The ruling of the U.S. Court of International Trade is so wrong and so political! Hopefully, the Supreme Court will overturn this horrible decision quickly and decisively. We cannot allow underground scammers to destroy our nation!" he added, stating that the most logical way to impose tariffs, which would be to obtain approval from Congress, "would completely destroy presidential power (...) Radical left judges, along with very bad people, are destroying the United States. With this decision, our country would lose trillions of dollars, money that will make America great again. It would be the most severe financial judgment ever imposed against us as a sovereign nation. The President of the United States must have the right to protect the U.S. from those causing economic and financial harm."
The entire process has caused a new earthquake in Washington. Trump has declared an almost total trade war on the entire planet simultaneously, promising a new "golden age" for his country and even fantasizing about eliminating income taxes, with revenue being compensated in his plan by contributions from 200 countries to the public coffers in exchange for the "honor and privilege" of trading with the U.S. However, he used methods that the specialized court deemed illegal and invalid: invoking the International Emergency Economic Powers Act (IEEPA). "The court holds that the IEEPA does not authorize any of the global tariff orders, retaliatory or drug trafficking, which exceed any authority granted to the president to regulate imports. The challenged tariff orders will be annulled, and their application permanently suspended," states the ruling published on Wednesday night.
The Department of Justice has already filed an appeal stating that "it is crucial, for the national security of the country and the conduct of the president's delicate diplomatic negotiations, that the Court suspends its ruling. The harm to foreign affairs resulting from the precautionary measure ordered by the Court could not be greater. If not suspended, the Secretary of State warns that the Court's decision "would cause significant and irreparable harm to the foreign policy and national security of the United States" and "would threaten broader strategic interests of the U.S. internationally."
The Constitution establishes that decisions such as unilaterally and massively raising tariffs are solely the prerogative of Congress, although over many decades, the legislative branch has been relinquishing those powers in favor of the Executive. Trump could have attempted his strategy through the two Chambers, where his Party holds the majority, but he preferred to reinforce the doctrine that asserts the president has much more real power than his predecessors believed.
Trump could have also used other laws and clauses, the same ones that allowed for sectoral tariffs to be imposed, such as those on aluminum, steel, or cars. Or even invoke some provisions that allow for moderate and temporary tariff increases under certain circumstances, as he did in his first term punishing China. However, the so-called reciprocal tariffs go beyond all that. There is nothing that gives him as much power and leeway as the emergency laws, which the Court considers cannot be used because a trade deficit with other countries, something that has been happening for decades, can hardly be considered a novelty or an emergency.
"We believe we have a strong case. Yes, we will appeal immediately and try to suspend the ruling," stated this Thursday Peter Navarro, the main architect of Trump's trade wars, in an interview with Bloomberg. Navarro, in a unique interpretation, believes that the judicial ruling would demonstrate that the administration can use different legal grounds to impose a base tariff of 10% and higher "reciprocal" tariffs on many countries. "So, nothing has really changed in that sense... At this moment, there are still countries calling us and saying they want a deal. These deals will materialize."
At the core of this issue lies the White House's argument during oral arguments, asserting that tariffs would not only provide revenue but also that the president was the only one with the capacity to determine what constitutes an emergency and what are the appropriate tools to address it. They also argued that pressuring the rest of the world gave them a strong position to negotiate. "If this court limits that authority, foreign counterparts will have less incentive to reach significant agreements, resulting in the status quo that led to the national emergency," stated Howard Lutnick, the Commerce Secretary, in a statement presented before the panel last week.
The ruling "would destroy a carefully negotiated agreement with China and seriously disrupt the coordination of the Department of Commerce's economic foreign policy actions on behalf of the president," according to Lutnick. Additionally, "it will threaten to shatter our negotiations with dozens of countries and create an immediate risk that our trading partners will feel emboldened to exploit a perceived new vulnerability by retaliating against the U.S.," Treasury Secretary Scott Bessent also warned.
"I am confident that, when we appeal, this decision will be overturned," stated this morning, local time, Kevin Hassett, director of the National Economic Council at the White House, on a Fox program. Hassett downplayed the ruling, calling it one of the few "minor setbacks here and there" and reminded that the president has other legal tools at his disposal, although he "does not plan to apply them at this time."