Description: The New York – based Court of International Trade (CIT) abruptly and unanimously blocked the effect of Trump’s tariffs on Wednesday. After the White House’s harsh reaction and the filing of an appeal before the Court of Appeals for the Federal Circuit in Washington, the tariffs remained in effect awaiting further legal proceedings. The CIT brought forward a unanimous decision to block the tariffs citing illegal overstepping of presidential jurisdictions to unilaterally impose tariffs and violations of the International Economics and Emergency Powers Act (IEEPA) from 1977. CIT’s ruling was based on a filing from the nonpartisan Liberty Justice Center and a small coalition of US governors who opposed Trump’s imposition of tariffs. The abrupt blockade temporarily stabilized global markets while the statements from the affected countries were cautiously optimistic. The next hearing was scheduled for 05 Jun, and the case is largely expected to reach the judicial benches of the US Supreme Court.
Impact: The CIT has fired a legal broadside into Trump’s economic policies and substantially shortened the lifespan of negotiating power the US administration capitalized on so far. The abrupt cancellation of the tariffs significantly undermined Trump’s presidential authority in front of countries that were struggling to approach US trade negotiations. Despite the legal obstacles, Trump could still manage to circumvent rulings from the CIT and the lower Courts opposing his tariff policies and continue the economic disruption further destabilizing global markets. Legal limitations imposed by the CIT and other lower Courts coupled with projections that the case would end up before the US Supreme Court still positions the US administration in a precarious position regarding the tariffs and undermines their negotiating power going forward. China, Europe, Japan and other larger economies actively engaged in trade negotiations are expected to largely benefit from the legal obstacles imposed by US Courts. Tariffs in some shape and form would still be imposed, however, the recent legal developments suggest significantly lower percentages as countries and economic blocs gain leverage over the US.