Trouble in Tariffdise? US appeals court deems Trump tariffs unlawful

A US appeals court ruled that most of the Trump administration’s tariffs are unlawful.

They have, however, agreed to leave the tariffs in place while the government takes the case to the Supreme Court.

The case against the Trump administration started in a lower court, the US Court of International Trade. It has since made its way through the hierarchy, now set to make an appearance in the US Supreme Court (USSC).

For now, the 7-4 ruling of the US appeals court indicates that tariffs of this scale require congressional authority.

So, what is the impact if this decision is upheld by the Supreme Court?

First, the decision would invalidate the vast majority of tariffs levied under the Trump administration, requiring congressional approval in order to utilise them legally.

As there is still a Republican majority in congress, It is likely that Donald Trump would still be able to get his tariffs approved.

However, it is likely to fundamentally alter Trump’s approach to international trade agreements.

So far, Trump’s negotiation model consists of applying broad, high rate tariffs and then using them as bargaining chips in international trade negotiations.

Under the new ruling, two main issues arise. 

Firstly, the breadth of imposing high rates on a broad range of countries.

If large international trade agreements require congressional approval, it would be almost impossible for congress to confer such a wide power to Trump as to allow him to impose 10-30% tariffs on 10s of countries.

Secondly, even if Trump did manage to overcome the former, the granularity of Congress approving individual negotiations with each of the countries is likely to significantly slow down the process of Trump-style deal making.

Although, for many countries, this could provide a golden opportunity.

If trade deals become invalidated by the absence of US tariffs, many countries who have struck regrettable deals with the US will be able to return to the negotiating table for a second chance.

On the flip side, this may put well negotiated and mutually-beneficial deals at risk of falling apart.

Another key issue for Trump could be the loss of tariff revenue which has helped bolster government finances and offset the deficit caused by Trump’s ‘big beautiful [tax] bill’.