A federal court has blocked U.S. President Donald Trump's sweeping tariffs, in a major blow to a key component of his economic policies. The Court of International Trade ruled that an 'emergency law ' invoked by the White House did not give the president unilateral authority to impose tariffs on nearly every country.
The Manhattan-based court said the US Constitution gave Congress exclusive powers to regulate commerce with other nations and this was not superseded by the president's remit to safeguard the economy. It is the first major legal challenge to Trump's so-called "Liberation Day" tariffs.
A three-judge panel ruled that the International Emergency Economic Powers Act ( IEEPA), a 1977 law that Trump cited to justify the tariffs, does not give him the power to impose the sweeping import taxes.
The Trump administration lodged an appeal within minutes of the ruling. The White House criticised the ruling, saying, "It is not for unelected judges to decide how to properly address a national emergency."
But what is the International Emergency Economic Powers Act (IEEPA), a 1977 law that is in question here?
IEEPA explained
The International Emergency Economic Powers Act of 1977 gives the US president broad powers to regulate various financial transactions upon declaring a national emergency. Under the law, presidents can take a wide variety of economic actions “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy or economy” of the country, as per a New York Times report.
US presidents have frequently used the law to impose sanctions, justify export controls, and restrict certain transactions and outbound investment, Kelly Ann Shaw, a partner at Hogan Lovells and a former economic adviser to the Trump administration, told NYT.
No president has previously used IEEPA to put tariffs on imported goods, according to a recent Congressional Research Service report.
"Instead, presidents have imposed tariffs in response to national security threats using Section 232 of a 1962 trade law. That legal provision differs from IEEPA in part because it requires an investigation and report that has to be issued within 270 days. The provision also focuses on certain imports that threaten to impair U.S. national security," the NYT report states.
The US Congress initially passed IEEPA in an attempt to restrict the emergency economic powers granted to the president under the Trading with the Enemy Act, a 1917 law that gave the president expansive authority to regulate international transactions during wartime. President Richard M. Nixon used the precursor statute to briefly impose a 10 percent universal tariff in 1971.
Some scholars have questioned whether IEEPA grants the president “unchecked executive authority in the economic realm,” says NYT, citing the C.R.S. report. "Others argue that IEEPA is an effective foreign policy tool that allows the president to rapidly carry out the will of Congress."
Trump's tariffs threats
Trump on April 2 unveiled an unprecedented global tariff regime by imposing import taxes on most of the US's trading partners.
A 10% baseline tariff was placed on most countries, along with steeper reciprocal tariffs handed down to dozens of nations and blocs, including the EU, UK, Canada, Mexico and China.
Trump argued that the sweeping economic policy would boost American manufacturing and protect jobs.
Global markets have been thrown into disarray since the announcement and later after Trump's reversals and pausing of tariffs as foreign governments came to the negotiating table.
Adding to the turmoil was a prolonged trade war with China, as the world's two economic superpowers engaged in a back-and-forth raising of tariffs, which reached a peak with a 145% US tax on Chinese imports, and a 125% Chinese tax on US imports.
The world's two biggest economies have since agreed to a truce, with US duties on China falling to 30%, and Chinese tariffs on some US imports reducing to 10%.
The UK and US have also announced a deal on lower tariffs between the two governments.
Trump threatened a 50% tariff from June on all goods coming from the EU after expressing frustration with the pace of trade talks with the bloc - but then agreed to extend the deadline by more than a month after EU Commission chief Ursula von der Leyen said more time was needed.
The Manhattan-based court said the US Constitution gave Congress exclusive powers to regulate commerce with other nations and this was not superseded by the president's remit to safeguard the economy. It is the first major legal challenge to Trump's so-called "Liberation Day" tariffs.
A three-judge panel ruled that the International Emergency Economic Powers Act ( IEEPA), a 1977 law that Trump cited to justify the tariffs, does not give him the power to impose the sweeping import taxes.
The Trump administration lodged an appeal within minutes of the ruling. The White House criticised the ruling, saying, "It is not for unelected judges to decide how to properly address a national emergency."
But what is the International Emergency Economic Powers Act (IEEPA), a 1977 law that is in question here?
IEEPA explained
The International Emergency Economic Powers Act of 1977 gives the US president broad powers to regulate various financial transactions upon declaring a national emergency. Under the law, presidents can take a wide variety of economic actions “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy or economy” of the country, as per a New York Times report.
US presidents have frequently used the law to impose sanctions, justify export controls, and restrict certain transactions and outbound investment, Kelly Ann Shaw, a partner at Hogan Lovells and a former economic adviser to the Trump administration, told NYT.
No president has previously used IEEPA to put tariffs on imported goods, according to a recent Congressional Research Service report.
"Instead, presidents have imposed tariffs in response to national security threats using Section 232 of a 1962 trade law. That legal provision differs from IEEPA in part because it requires an investigation and report that has to be issued within 270 days. The provision also focuses on certain imports that threaten to impair U.S. national security," the NYT report states.
The US Congress initially passed IEEPA in an attempt to restrict the emergency economic powers granted to the president under the Trading with the Enemy Act, a 1917 law that gave the president expansive authority to regulate international transactions during wartime. President Richard M. Nixon used the precursor statute to briefly impose a 10 percent universal tariff in 1971.
Some scholars have questioned whether IEEPA grants the president “unchecked executive authority in the economic realm,” says NYT, citing the C.R.S. report. "Others argue that IEEPA is an effective foreign policy tool that allows the president to rapidly carry out the will of Congress."
Trump's tariffs threats
Trump on April 2 unveiled an unprecedented global tariff regime by imposing import taxes on most of the US's trading partners.
A 10% baseline tariff was placed on most countries, along with steeper reciprocal tariffs handed down to dozens of nations and blocs, including the EU, UK, Canada, Mexico and China.
Trump argued that the sweeping economic policy would boost American manufacturing and protect jobs.
Global markets have been thrown into disarray since the announcement and later after Trump's reversals and pausing of tariffs as foreign governments came to the negotiating table.
Adding to the turmoil was a prolonged trade war with China, as the world's two economic superpowers engaged in a back-and-forth raising of tariffs, which reached a peak with a 145% US tax on Chinese imports, and a 125% Chinese tax on US imports.
The world's two biggest economies have since agreed to a truce, with US duties on China falling to 30%, and Chinese tariffs on some US imports reducing to 10%.
The UK and US have also announced a deal on lower tariffs between the two governments.
Trump threatened a 50% tariff from June on all goods coming from the EU after expressing frustration with the pace of trade talks with the bloc - but then agreed to extend the deadline by more than a month after EU Commission chief Ursula von der Leyen said more time was needed.
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