A U.S. trade court blocked many of President Donald Trump’s tariff plans late Wednesday but left in place a 25% levy on vehicles and parts and a tax on foreign made steel and aluminum. But, late Thursday, a federal appeals court blocked that ruling from taking effect.
The court says the tariffs enacted under the International Emergency Economic Powers Act of 1977 (IEEPA) exceeded the president’s authority. It went on to say the Constitution gave Congress exclusive powers to levy and collect taxes and so forth, and to regulate international commerce. The panel of judges says it “does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.”
Late Thursday, an appeals court stayed the trade court's ruling while it sorted arguments in the case.
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Trump says the tariffs will force companies to bring manufacturing jobs back to the U.S. and will also generate revenue to reduce federal budget deficits. Since imposing the taxes, he has used them to negotiate agreements with other nations, a tactic which suggests he would just set aside the tariffs on his own, fueling uncertainty in many industries, including the heavy-duty aftermarket.
Kush Desai, White House spokesperson, says Trump’s administration is “committed to using every lever of executive power to address this crisis and restore American Greatness.”
The ruling did note Trump could still levy tariffs of 15% for 150 days on nations with which the country runs a substantial trade deficit according to the Trade Act of 1974. But this is much less than Trump’s threatened tariffs of 145% on China and upwards of 200% on certain European goods.
The court left in place any tariffs Trump put in place using powers from the Trade Expansion Act of 1962, which includes the 25% tax on most imported vehicles and parts as well as a tax on foreign-made steel and aluminum.
There are at least seven lawsuits challenging Trump’s tariff plans. In this case, the plaintiffs, which includes states and businesses, argued the emergency powers law does not authorize the use of tariffs and, if it did, the trade deficit is not an emergency. The U.S. has run a trade deficit with the rest of the world for the past 49 years.
The administration has already said it would appeal the trade court’s ruling.
“This ruling represents a setback for the administration’s tariff plans and increases uncertainty but not might not change the final outcome for most major U.S. trading partners,” Goldman Sachs says in a research note. “For now, we expect the Trump administration will find other ways to impose tariffs.”
