In a surprise twist for those watching global trade, a divided US appeals court has determined that Donald Trump's tariffs are illegal, further weakening one of the Republican President's scripts for using levies as a linchpin of international economic policy. This ruling may have wide-ranging impacts across sectors that depend on tariff-enabled protections and disrupt import-export planning.
With a legal lens becoming clearer, the fight over the independence of the Federal Reserve appears on course for the Supreme Court, keeping alive the prospect of a historic showdown this year that could challenge the full breadth of Trump's economic agenda. As of now, the court has permitted the tariffs to stay in effect until October 14, providing the Trump administration a window to escalate the matter to the US Supreme Court.
In his second term, Trump has made tariffs a robust foundation of the US foreign policy, using them as a political tool and means of renegotiating trade agreements with exporting countries. While these actions gave the administration significant leverage, they contributed to increased volatility across financial markets.
Trump condemned the ruling, claiming that the court was "politically motivated" and raised hope that the tariffs would ultimately be approved. He expressed optimism that the policies will remain part of maintaining the US economic benefits, possibly with help from the Supreme Court.
In a 7-4 decision, the US Court of Appeals for the Federal Circuit in Washington, D.C., reviewed the legality of the "reciprocal" tariffs, which were enacted in April by Trump, as well as a different set that was passed in February on Chinese, Canadian and Mexican goods.
The majority was composed of six judges appointed by Democratic presidents and one appointed by a Republican, while the dissent had two Democrats and two Republicans. The ruling does not affect tariffs instituted under other legal authorities, such as tariffs on steel and aluminium imports.
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