A U.S. appeals court has sided with the Trump administration, allowing controversial tariffs on goods from China, Canada, and Mexico to remain in place—for now. The court also called for a fast-tracked review of the ongoing legal challenge.

The U.S. Court of Appeals in Washington, D.C. extended the suspension of a lower court’s decision that invalidated Trump-era tariffs, originally imposed on Liberation Day. The ruling emphasized that a fresh review is necessary to determine whether Trump exceeded his legal powers. Until this review concludes, the reciprocal tariffs aimed at key U.S. trade partners remain in force.

Small Businesses and States Challenge Trump's Tariffs

Earlier this year, a coalition of small businesses and a dozen states filed a lawsuit in the U.S. Court of International Trade, arguing that Trump’s tariffs exceeded presidential authority under the International Emergency Economic Powers Act (IEEPA). In May, the trade court sided with the plaintiffs and ruled the White House must end the tariffs—separately applied to China, Canada, and Mexico.

The Trump administration swiftly appealed, and the next day a district court issued a stay on the ruling. Now, the appeals court has confirmed that the tariffs can stay in effect while the appeal is under review and ordered an expedited summer timeline, calling the matter “of exceptional importance.”

Ilja Somin, law professor at George Mason University and legal counsel for the plaintiffs, called the ruling disappointing but acknowledged that the court has agreed to fast-track the case. Jeffrey Schwab, lead attorney at Liberty Justice Center, echoed this sentiment but expressed confidence that the tariffs will ultimately be overturned.

The White House, on the other hand, hailed the decision as a “welcome development,” stating that Trump’s actions were within the legal authority granted by the Constitution and Congress to address persistent trade deficits and drug-related concerns.

Trump Is the First to Use IEEPA for Tariffs

Traditionally, IEEPA has been used by presidents to sanction enemy states or freeze foreign assets. Donald Trump is the first to use it as a basis for imposing import tariffs—including February’s duties on China, Mexico, and Canada, which he claimed were necessary to combat fentanyl trafficking. April’s additional measures addressed broader trade imbalance concerns.

Critics argue that the national trade deficit does not constitute an emergency under IEEPA, and therefore the use of the law is not legally justified. Small business owners in particular claim the move was excessive and harmful.

The administration shows no signs of backing down and may pursue the case all the way to the Supreme Court.

Steel and Auto Tariffs Remain Unaffected

The current appeals court ruling does not impact broader industry-specific tariffs, such as those on steel, aluminum, automobiles, and auto parts. These were enacted under Section 232 of the Trade Expansion Act, which allows the president to impose tariffs if national security is at stake. This legal pathway remains available to the administration regardless of the IEEPA case’s outcome.

What Happens If Tariffs Are Removed?

JPMorgan estimates that if no new tariffs are imposed and the IEEPA-based ones are repealed, the U.S.’s effective tariff rate could drop to around 5%. Even then, it would still be double the level seen in 2024—highlighting the significant impact of Trump’s trade policies on the nation’s global economic strategy.



#TRUMP , #Tariffs , #TradeWars , #USPolitics , #TradingCommunity

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