The Trump administration on Thursday denounced the “activist judge” as it appears to overturn a major legal blow to President Donald Trump’s signature economic policy.
On Wednesday, the US Trade Court determined that Trump’s tariff system was illegal and that it had given a dramatic twist that could hamper the US president’s controversial global trade policy.
The ruling by a three-judicial panel at the New York-based International Trade Court comes after several cases claimed Trump exceeded his authority, relying on the president’s whims for US trade policies and unleashing economic turmoil around the world.
Tariffs usually need to be approved by Congress, but Trump has so far bypassing that requirement by claiming that the country’s trade deficit is rich in national emergency. This allowed the US president to apply sweep tariffs to most countries last month.
The court’s ruling stated that Trump’s customs order “exceeds more than the authorities granted to the president to regulate imports caused by tariffs.”
The judge was keen to state that he had not made a judgment on “the wisdom or potential effectiveness of using presidential tariffs as leverage.” Instead, their rulings were concentrated on whether trade collection was legally applied in the first place. Their use was “not because they are neither wise nor effective, nor because (federal law) has not allowed it, and is unacceptable,” the decision explained.
Financial markets cheered on the court’s ruling, and the US dollar later gathered and soared towards the euro, yen and Swiss franc. In Europe, Germany’s DAX rose 0.9%, while France’s CAC40 rose 1%. The UK FTSE 100 Blue Chip Index rose 0.1% at the time of trading. Asian stocks also rose on Thursday, but all rose slightly in the US stock markets in early trading.
The court’s decision immediately invalidates all customs orders issued through the International Emergency Economic Force Act (IEPA), a law aimed at dealing with “an unusual and extraordinary” threats in an international emergency.
The judge said Trump must issue a new order within 10 days, reflecting the permanent injunction.
However, the Trump administration has already filed it to oppose the ruling. White House officials were attacked by court authority. “We cannot determine how unelected judges will properly deal with national emergency,” White House spokesman Kush Desai said in a statement to Reuters.
Speaking to Fox, White House economic adviser Kevin Hassett, he said that three trade deals were almost over and despite the ruling he was expecting more. “If there are few hiccups here and there due to decisions made by activist judges, it certainly doesn’t affect negotiations, rather than worrying at all,” Hassett said.
The ruling, if it stands, will blow a huge hole through Trump’s strategy, sweep away from trading partners, pulling manufacturing back to the US coast and concessions from trade partners to reduce the US goods trade deficit of 1.2 tonnes (£89.2 billion);
Without Ieepa’s help, the Trump administration will need to take a slower approach, launch longer trade investigations and adhere to other trade laws to support the threat of tariffs.
The decision is also likely to burn other challenges to Trump’s policy. Last month, California Gov. Gavin Newsom filed a lawsuit against the tariffs, claiming it was “illegal and total suspension.”
The legal challenge to Ieepa’s decision should be heard in the Federal Circuit in Washington, DC, and ultimately in the US Court of Appeals of the U.S. Supreme Court.
These could remain for now as the courts were not asked to address industry-specific tariffs Trump issued on automobiles, steel and aluminum using different laws.
Analysts at Goldman Sachs said there could be other legitimate means for Trump to impose on-board and country-specific tariffs, saying, “The ruling represents a set-off in the administration’s tariff plans and raises uncertainty, but may not change the end result of most major US trading partners.”
“We’ve seen a lot of effort and we’ve seen you in the world,” said Jim Reid, a strategist at Deutsche Bank. “If the judgment continues and prevents the use of tariffs under the IEEPA, one option for administration is to expand the use of other tariff equipment, such as the national security grounds used for tariffs on automobiles, steel and aluminum.”
After the newsletter promotion
Other options for the President include sections based on various trade laws that empower them to intervene in trade policies.
Stephen Miller, policy director for the White House Deputy Chiefs of Staff, went to the verdict in a social media post claiming that “judicial coups are out of control.”
Trump did not immediately post any responses about the true society. Instead, he posted about what he characterized as a favorable award in another case. There, he is suing the Pulitzer Committee, which will award the most prestigious journalism award in the United States.
At least seven lawsuits challenge Trump’s border tax, which is the heart of Trump’s trade policy.
The court ruled in two cases. One was submitted by a group of small businesses including wine importers, VOS Selection.
The other was submitted by 12 US states led by Oregon. “This ruling reaffirms that our laws are important and that we cannot make trade decisions on the president’s whim,” said Oregon Attorney General Dan Rayfield.
The plaintiffs in the tariff suit alleged that the Emergency Powers Act did not give the President the power to apply tariffs, and even if that was done, the trade deficit was not eligible for an emergency defined as an “abnormal and extraordinary threat.” The United States has been in a trade deficit with other parts of the world for 49 consecutive years.
Trump has imposed tariffs on most countries to reverse the massive, long-standing trade deficits in the United States. He also argues that it is intended to target imports from Canada, China and Mexico, and combat the illegal flow of immigration and synthetic opioids across US borders.
His administration pointed to the court’s approval of former President Richard Nixon’s emergency use of tariffs in 1971, arguing that only Congress, not the court, could decide on the “political” question of whether the president’s rationale for declaring a state of emergency was in accordance with the law.
Trump’s “liberation day” tariffs have shaken up global financial markets and led many economists to downgrade the US economic growth outlook.
Reuters and the Associated Press contributed to the report