The tariffs imposed by former US President Donald Trump have backfired. Trump claimed he had the authority to levy heavy tariffs on foreign goods, bypassing Congress. A federal appeals court has now intervened, challenging this claim. The court asserts that the Constitution grants Congress the power to impose tariffs, though lawmakers have gradually given presidents more authority over them. The court found that Trump overstepped by using a declaration of national emergency to justify tariffs on nearly every country in the world. This decision largely upholds a May ruling by the Special Federal Trade Court in New York.
The court’s decision dealt a significant blow to Trump. The uncertainty surrounding his trade policies has rattled financial markets, causing business stagnation, price increases, and concerns about economic slowdown. The court’s ruling concerned tariffs imposed by Trump in April on almost all US trading partners.
The Trump administration had argued that former US President Richard Nixon was permitted to impose tariffs based on an economic emergency. The court responded by stating that Nixon took this step when he ended the policy 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 powers.
There was some disagreement among the judges in the court’s Friday decision. The court stated that the 1977 law does not permit emergency measures. The government argued that if Trump’s tariffs are removed, it would have to return all the tariffs it has collected from several countries. The government stated that the total revenue for July was $159 billion, which was double that of the previous year. The Justice Department warned in a legal argument that removing tariffs could lead to a financial crisis in the US, making it difficult for Trump to impose tariffs in the future.
Trump has long called America’s trade deficit a national emergency. Without Congressional consent, Trump claimed he imposed these tariffs using the 1977 International Emergency Economic Powers Act, which he said was in the country’s interest. The court has said that the US Constitution grants Congress the power to set taxes, including tariffs, although lawmakers have gradually given presidents more authority on tariffs. The court noted that Trump took full advantage of this.
After announcing the tariffs, Trump postponed them for 90 days to allow countries to negotiate trade agreements with the US. Some countries accepted Trump’s decision, including the UK, Japan, and the European Union. However, many countries did not bow down to Trump. In a major blow, Trump imposed additional tariffs on those countries earlier this month, including Laos (40%), India (50%), and Algeria (30%).