The situation: A flurry of federal court rulings—including a decision from a federal appeals court on Thursday afternoon—deepened the uncertainty surrounding US trade policy, including the sweeping tariffs the Trump administration imposed under emergency powers.
- The US Court of International Trade on Wednesday evening ruled that the administration overstepped its authority by invoking emergency powers to levy broad-based “reciprocal” tariffs starting April 2. That decision also invalidated 20% duties aimed at Canada, Mexico, and China over alleged links to the US fentanyl crisis.
- A second ruling from the D.C. District Court on Thursday afternoon reinforced that finding by blocking the government from collecting duties from the plaintiffs in a parallel case.
- But the legal outlook shifted again hours after the D.C. District Court’s decision when a federal appeals court agreed to temporarily preserve many of the disputed tariffs, granting a stay of the Court of International Trade’s ruling. The move allows the administration to continue collecting duties from most importers while it seeks a longer delay—and prepares for what could be a lengthy legal fight that’s likely to end at the Supreme Court.
The back-and-forth legal decisions have thrown the administration’s trade policies into limbo, even as many duties remain firmly in place. Tariffs imposed under national security justifications—such as those on steel, aluminum, and autos—are unaffected by the rulings and continue to apply.
The potential paths: The initial court rulings would have slashed the US effective tariff rate from 17.8% to 6.9%, per the Yale Budget Lab. While notable, that’s still more than double the roughly 3% rate when Trump took office. And the administration retains broad authority to impose new tariffs using existing laws without congressional approval.
Key options still in play include:
- Section 122 (Trade Act of 1974): Allows the president to impose up to 15% tariffs for six months on countries with significant trade imbalances, such as China, Vietnam, or Mexico. Congressional approval is required to extend the duties. This could serve as a quick replacement should the 10% near-universal duties be overturned.
- Section 232 (Trade Act of 1974): Permits tariffs on national security grounds, which the administration is currently using for steel and aluminum. While effective, it involves a formal process with public comment, delaying implementation.
- Section 301 (Trade Act of 1974): Enables tariffs in response to unfair trade practices. However, the US Trade Representative must conduct an investigation and gather public input before duties can be put in place. This was the basis for many Trump-era tariffs on China.
- Section 338 (Trade Act of 1930): A rarely used law that permits duties up to 50% on imports from countries that discriminate against US commerce. While less frequently invoked, it remains a potent tool if trade tensions escalate.