The tariffs implemented by former US President Donald Trump have created complications for his administration. Trump had claimed that he could bypass Congress and impose tariffs on imported goods. However, a federal appeals court has blocked this assertion. The court’s decision states that the Constitution grants the power to set tariffs to Congress, although presidents have gained more authority over time. The court determined that Trump had gone too far in justifying tariffs on numerous countries by declaring a national emergency. This decision supports the May ruling made by the Special Federal Trade Court in New York.
The court’s ruling was a setback for Trump, and the uncertainty in his trade policies has had a significant impact. Financial markets have been destabilized, leading to business stagnation, inflation, and concerns about economic downturn. The court’s decision specifically addressed the tariffs Trump had implemented in April on almost all US trading partners.
The Trump administration argued that former US President Richard Nixon was allowed to impose tariffs during an economic crisis, citing emergency powers. The court countered that Nixon took this action when he ended the policy of linking the dollar to gold. The US International Trade Court in New York ruled that Trump’s tariffs exceeded the powers granted to the President under emergency conditions.
There was some dissension among the judges regarding the court’s decision. The court stated that the 1977 law does not permit emergency measures. The government has argued that if Trump’s tariffs are removed, the government will have to return all the tariffs already collected from several nations. The government said that July’s revenue was $159 billion, which was double the previous year’s revenue. The Justice Department cautioned in a legal argument that eliminating the tariffs could trigger a financial crisis in the United States and could hinder Trump’s ability to impose tariffs in the future.
Trump declared the longstanding US trade deficit a national emergency. Trump, without Congressional approval, asserted that the tariffs were implemented using the 1977 International Emergency Economic Powers Act, which he believed was in the country’s best interest. The court asserted that the US Constitution grants Congress the power to set taxes, including tariffs, although lawmakers have gradually given presidents more authority. The court observed that Trump fully exploited this.
Following the tariff announcement, Trump delayed their implementation for 90 days to allow countries to negotiate trade agreements with the US. The UK, Japan, and the European Union were among the countries that accepted Trump’s actions. However, other countries did not concede to Trump. Trump imposed additional tariffs on these countries earlier this month, including Laos (40%), India (50%), and Algeria (30%).