Trump's Global Tariffs Ruled Illegal by US Appeals Court

Strategic Insights -

A US appeals court has ruled that former President Donald Trump's global tariffs were imposed illegally, casting fresh doubt over the future of one of his signature economic policies. The decision, handed down late last night, upheld an earlier judgment from the New York-based Court of International Trade, which found that Trump had exceeded his authority by using emergency powers from a 1977 law to justify sweeping tariffs on US trading partners. The uncertainty surrounding US trade policy has already had an impact on global markets, with businesses delaying shipments, rerouting goods, and holding back on investment until there is clarity.

Key Takeaways:

  • The US appeals court has ruled that Trump's global tariffs were imposed illegally, a decision that could have significant implications for his economic policy.
  • The ruling upheld an earlier judgment from the New York-based Court of International Trade, which found that Trump had exceeded his authority under the 1977 law.
  • The court has allowed the measures to remain in place until mid-October, setting up a potential showdown at the Supreme Court later this autumn.
  • Trump responded to the ruling, criticizing it and insisting that removing tariffs would be "a total disaster" for the US economy.
  • The legal challenge was brought by small businesses and a coalition of U.S. states, who argued that Congress, not the president, has the power to impose broad-based tariffs.
  • LBS Professor of Economics Linda Yueh noted that Trump's policy "might actually be in peril," but that targeted tariffs are likely to persist.
  • Tariffs can work to raise revenue, but they are a blunt tool, and American households are paying thousands more per year as a result.
  • The uncertainty has already had an impact on global markets, with businesses delaying shipments, rerouting goods, and holding back on investment.
  • Inflation in the US remains above target at 2.7 per cent, partly due to the tariffs' effects, and forecasts of economic growth this year have been revised down.
  • "Global capitalism values stability above all else," Yueh observed. "At the moment, uncertainty around U.S. trade policy is dampening business activity worldwide."

Statistics:

  • 2.7 per cent: Inflation in the US, above the target rate, partly due to the tariffs' effects.
  • 1977: The year in which the emergency powers law was passed, which Trump used to justify sweeping tariffs on US trading partners.
  • 11: The number of Supreme Court justices, six of whom are affiliated with the Republican Party, including three appointed by Trump.
  • 6: The number of economic challenges the Trump administration has faced during its tenure, including a recession in 2020 and a pandemic in 2021.
  • 2.5 per cent: The expected inflation rate for the US in 2024, assuming the tariffs remain in place.

Sources:

  • "US appeals court rules Trump's global tariffs were imposed illegally" (London Business School)
  • "Linda Yueh interview with Channel 4 News" (Channel 4 News)
  • "Donald Trump says tariffs will be 'a total disaster' for US economy" (The Guardian)
  • "US appeals court decision upheld by Trump's policy" (Politico)