US court rules Trump's tariffs illegal, adding to uncertainty on global markets

Yesterday, the International Trade Court in Manhattan blocked the imposition of tariffs announced by Trump, ruling that the president exceeded his authority, Reuters reports.

 

The court noted that the US Constitution gives Congress exclusive authority to regulate trade with other countries, which cannot be overridden by the president's emergency powers to protect the US economy. Therefore, by imposing tariffs on imports from other countries, Trump exceeded his authority.

 

"The court did not assess the appropriateness or effectiveness of the president's use of tariffs as leverage, but found their use inadmissible because federal law does not permit it," the three-judge panel said in its decision.

 

The ruling came in two lawsuits: one brought by the independent Liberty Justice Center on behalf of five small American businesses that import goods from countries subject to tariffs, and the other by 13 U.S. states. The companies, which include a New York importer of wine and spirits and a Virginia maker of educational kits and musical instruments, said the tariffs would hurt their ability to do business.

 

The Trump administration immediately filed an appeal, and White House Deputy Chief of Staff and one of Trump's top political advisers, Stephen Miller, wrote on social media that "the judicial coup is out of control."

 

The court's ruling repeals a 30% tariff on imports from China, a 25% tariff on some goods imported from Mexico and Canada, and a 10% universal tariff on most goods imported into the U.S. from all countries around the world. At least five other court challenges to the tariffs are pending.

 

According to the Financial Times, the Trump administration has effectively banned some American companies from selling software used to develop semiconductors to China. And the New York Times reported that it has halted sales of jet engine technology and some chemicals to China. The Commerce Department told CNN on Wednesday that it is “reviewing strategic exports to China and in some cases has suspended existing export licenses or imposed additional licensing requirements for the period.”

 

The move could be another blow in the ongoing trade war between the world's two largest economies, which is ostensibly on hold while negotiations on a trade deal are underway, but the actions of the US Commerce Department are indicative of the complex relationship between the countries and the difficulty in maintaining peace.

 

The cancellation of the court-imposed import tariffs after Trump himself repeatedly postponed their introduction starting April 2 has a strong impact on the US stock market and increases uncertainty with supplies, which companies are either canceling or increasing (for example, APPLE imported large volumes of iPhones to the US to have sufficient stock before the imposition of tariffs), and the increase in tensions between China and the US will further increase pessimism in the markets.