
Key Points:
- Federal appeals court temporarily reinstated Trump’s sweeping tariffs after trade court blocked them
- Appeals court granted emergency stay arguing tariffs are “critical for national security”
- Trade court had ruled Trump exceeded authority using 1977 emergency powers law
- Tariffs affect nearly all US trading partners with rates up to 50% on some countries
- Legal battle continues with Trump threatening Supreme Court appeal if needed
Washington D.C.: A federal appeals court delivered a crucial victory to President Donald Trump on Thursday, temporarily reinstating his controversial “Liberation Day” tariffs just one day after a lower court declared them illegal. The Court of Appeals for the Federal Circuit granted an emergency motion from the Trump administration, allowing the sweeping import duties to remain in effect while the government appeals the trade court’s decision.
Appeals Court Grants Emergency Stay
The appeals court’s intervention came swiftly after the US Court of International Trade dealt a major blow to Trump’s trade agenda on Wednesday. In its Thursday ruling, the appeals court stated that “the request for an immediate administrative stay is granted” and that the trade court’s judgments would be “temporarily stayed until further notice”. The court gave plaintiffs until June 5 to submit their responses to the government’s appeal.
The Trump administration had argued that maintaining the tariffs was “critical for the country’s national security,” a position the appeals court accepted without providing detailed explanation for its decision. This emergency intervention ensures that Trump’s signature economic policies remain operational during the lengthy appeals process.
Trade Court’s Scathing Rebuke
The legal drama began Wednesday when a three-judge panel of the US Court of International Trade unanimously ruled that Trump had “overstepped his authority” by invoking the 1977 International Emergency Economic Powers Act (IEEPA) to impose his tariffs. The court determined that IEEPA, designed for urgent national emergencies, did not justify sweeping tariffs in response to long-standing trade deficits.
The trade court’s decision targeted two key components of Trump’s tariff strategy: the “Liberation Day” tariffs announced April 2 affecting most US trading partners, and the “fentanyl tariffs” on Canada, Mexico, and China, which the administration linked to drug trafficking concerns. The ruling represented a fundamental challenge to presidential authority in trade policy, with the court arguing that such broad economic measures required Congressional approval.
Scope and Impact of Liberation Day Tariffs
Trump’s April 2 tariff announcement, which he dubbed “Liberation Day,” represented the most significant US protectionist trade action since the 1930s. The policy established a baseline 10% tariff on virtually all US imports, with 57 countries facing additional “reciprocal” tariffs ranging from 11% to 50%.
The tariff structure revealed stark regional patterns, with Europe facing particularly harsh treatment – the European Union hit with 20% tariffs while countries like Bosnia and Herzegovina faced 36% duties. Africa saw 20 countries targeted with many facing rates above 30%, including Lesotho which topped the list at 50%. Asian nations, particularly in Southeast Asia, encountered severe penalties with Vietnam at 46%, Cambodia at 49%, and Myanmar at 45%.
Economic Consequences and Market Volatility
The tariff announcements sent shockwaves through global markets, with the S&P 500 dropping over 10% in the two days following the April 2 announcement. Financial analysts warned of significant economic disruption, with BlackRock estimating that a 20% effective tariff increase could reduce growth by 2-2.5%.
J.P. Morgan Research projected that the tariffs could boost inflation by 1-1.5% this year, potentially pushing real disposable income growth into negative territory. The firm calculated that the measures raised the average effective tariff rate from around 10% to over 23%, generating nearly $400 billion in revenue equivalent to 1.3% of US GDP.
Business confidence deteriorated rapidly, with the February services PMI slipping below 50 for the first time in two years. Major US retailers warned Trump in April that the escalating trade war with China would lead to visible price increases and product shortages.
Legal Challenges Mount
Trump faces at least seven separate lawsuits challenging his tariff authority, with the trade court ruling stemming from two combined cases: one from five small businesses and another from 12 US states including New York, Connecticut, and Arizona. The states argued that tariff costs fell disproportionately on them and that the measures failed to specifically target drug cartels as claimed.
Jeffrey Schwab, senior counsel at the Liberty Justice Center representing the small businesses, explained that “the reason [Trump] chose IEEPA was he thought he could do this unilaterally without much oversight by Congress. The court saw through that”. The businesses warned of “critical supplier and customer losses, costly supply chain changes, and direct threats to business survival”.
Administration’s Defiant Response
Trump responded to the trade court’s decision with characteristic defiance, posting on social media that the ruling would “completely destroy Presidential Power” if allowed to stand. He argued that requiring Congressional approval for tariffs would fundamentally alter the presidency, claiming the decision was “being hailed all over the World by every Country, other than the United States of America”.
White House trade adviser Peter Navarro struck a combative tone, telling reporters the administration would “respond forcefully” and was prepared to “fight this all the way up the chain”. He confirmed that even if the legal challenge succeeded, the administration would pursue tariffs “through other means,” suggesting alternative legal pathways remained under consideration.
Global Trade Implications
The legal uncertainty has complicated Trump’s use of tariffs as negotiating leverage with trading partners. Countries that had been engaging in intensive trade talks, including the European Union following threats of 50% tariffs, may now adopt a wait-and-see approach pending the appeals court decision.
The World Trade Organization reported a “sharp deterioration” in global trade outlook, predicting a 0.2% decline in global merchandise trade for 2025 after initially forecasting 2.7% growth. While the trade court ruling provided some market relief, economists warn that lingering uncertainty about potential tariff reimplementation continues to threaten global economic stability.
The appeals court’s temporary stay ensures that this high-stakes legal and economic drama will continue, with the ultimate resolution potentially reaching the Supreme Court if Trump’s administration loses its appeal.