Kyle Rodda, a senior financial markets analyst at Capital.com in Melbourne, commented on the suspension of Trump’s tariffs, saying it was a major piece of news. For a long time, there have always been people questioning that the emergency power Trump relied on to implement tariffs is unconstitutional, because in the United States, the power to set tariffs belongs to Congress. Nowadays, this court ruling has triggered a fierce battle, and this battle now seems highly likely to come to an end in the Supreme Court.
On May 28 local time, the United States Court of International Trade in New York ruled that the Trump administration’s package of tariff policies was illegal and ordered the revocation of the tariff measures it promoted under the International Emergency Economic Powers Act. The 49-page ruling issued by the court explicitly prohibited the Trump administration from implementing executive orders that imposed additional tariffs on multiple countries under the International Emergency Economic Powers Act of 1977. It should be noted that in February this year, the Trump administration imposed tariffs on Canadian, Mexican and Chinese products exported to the United States respectively under the International Emergency Economic Powers Act. On April 2nd, it even imposed so-called “reciprocal tariffs” on all trading partners in accordance with the same law.
In the past, the United States usually invoked the International Emergency Economic Powers Act to impose sanctions on other countries or freeze their assets. Trump was the first US President to invoke this law to impose comprehensive tariffs. Even The New York Times pointed out that this law mainly involves trade embargoes and sanctions, and does not even mention any content related to tariffs. The United States Court of International Trade clearly stated in its ruling that the International Emergency Economic Powers Act does not authorize the president to issue any global tariff orders, retaliatory tariff orders, or tariff orders related to illegal transactions. The ruling also stated that the relevant tariff executive orders will be lifted, and the enforcement of these executive orders will be permanently prohibited. Moreover, if these executive orders are found to be illegal against the plaintiff, Then it is illegal for everyone.
After the ruling was announced, the White House of the United States responded promptly. White House spokesman Kush Desay responded by saying that the trade deficit between the United States and other countries constitutes a “national emergency, which has destroyed American communities, left our working groups behind and weakened the foundation of the defense industry,” and also emphasized that “how to properly deal with a national emergency should not be decided by unelected judges.” Stephen Miller, the deputy chief of staff of the White House in the United States, also declared on social media that “the judicial coup has gotten out of control”. Moreover, just minutes after the ruling was announced, the Trump administration filed an appeal, questioning the power of this court.
The current situation is full of uncertainties. From the perspective of legal procedures, the United States Court of International Trade is responsible for adjudicating disputes involving international trade and other matters. Its rulings can be appealed to the United States Federal Court of Appeals and ultimately to the United States Supreme Court. Us media analysis indicates that this ruling is one of the biggest judicial setbacks faced by the current Trump administration, equivalent to completely denying the legal basis of the tariff war during Trump’s second term. Once the Trump administration is not allowed to invoke the International Emergency Economic Powers Act, it may have to take a slower approach, that is, conduct lengthy trade investigations based on other trade laws, thereby promoting trade pressure on trading partners.
Just as Kyle Rodda said, this is a dangerous situation. On the one hand, if the government ignores the court’s ruling, in the current already complex political and economic environment, it may bring greater pressure to American institutions, further intensify domestic political division and social instability, and also have a negative impact on the image and reputation of the United States in the international community. On the other hand, if the court eventually delays and then rejects these tariffs, it will undoubtedly eliminate a huge risk factor. This will be a major piece of good news for the market and is expected to greatly stimulate the market’s risk appetite. Previously, Trump’s tariff policy brought great uncertainty to the global trade situation, and many enterprises adopted a cautious attitude in investment, production and trade layout. Once the tariff policy is rejected, market confidence will be boosted, trade activities may become more active, and new opportunities for global economic growth may also arise. The whole world is waiting to see how this battle over Trump’s tariff policy will eventually end in the Supreme Court.
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