WASHINGTON — A federal appeals court temporarily reinstated the most sweeping of President Donald Trump’s tariffs on Thursday, a day after a trade court ruled Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.
The U.S. Court of Appeals for the Federal Circuit in Washington said it was pausing the lower court’s ruling to consider the government’s appeal, and ordered the plaintiffs in the cases to respond by June 5 and the istration by June 9.
Wednesday’s surprise ruling by the U.S. Court of International Trade had threatened to kill or at least delay the imposition of Trump’s so-called Liberation Day tariffs on imports from most U.S. trading partners and additional tariffs on goods from Canada, Mexico and China. The latter was related to his accusation that the three countries were facilitating the flow of fentanyl into the U.S.
The trade court’s three-judge ruled that the Constitution gave Congress, not the president, the power to levy taxes and tariffs, and that the president had exceeded his authority by invoking the International Emergency Economic Powers Act, a law intended to address threats during national emergencies.
Senior Trump istration officials had said they were undeterred by the trade court’s ruling, saying they expected either to prevail on appeal or employ other presidential powers to ensure the tariffs go into effect.
Trump has used the threat of charging U.S. importers costly tariffs for goods from almost every other country in the world as leverage in international trade talks, a strategy the trade court’s ruling would upend. The trade court ruling had not interfered with any negotiations with top trading partners that are scheduled in the days ahead, Trump’s istration said.
U.S. trading partners “are coming to us in good faith and trying to complete the deals before the 90-day pause ends,” Treasury Secretary Scott Bessent said in a Fox News interview. “So we’ve seen no change in their attitude in the past 48 hours. In fact I have a very large Japanese delegation coming to my office first thing tomorrow morning.”
Many U.S. trading partners offered careful responses. The British government said the trade court’s ruling was a domestic matter for the U.S. istration and noted it was “only the first stage of legal proceedings.” Both and the European Commission said they could not comment on the decision.
Canadian Prime Minister Mark Carney welcomed the trade court’s finding, saying it was “consistent with Canada’s longstanding position” that Trump’s tariffs were unlawful.
Financial markets, which have whipsawed wildly in response to every twist and turn in Trump’s chaotic trade war, had reacted with cautious optimism to the trade court ruling, though gains in stocks on Thursday were largely limited by expectations that the court’s ruling faced a potentially lengthy appeals process.
Indeed, analysts said broad uncertainty remained regarding the future of Trump’s tariffs, which have cost companies more than $34 billion in lost sales and higher costs, according to a Reuters analysis.
Some sector-specific tariffs, such as those on imports of steel, aluminum and automobiles, were imposed by Trump under separate authorities on national security grounds and were unaffected by the ruling.
The Liberty Justice Center, the nonprofit group representing five small businesses that sued over the tariffs, said the appeals court’s temporary stay was a procedural step.
Jeffrey Schwab, senior counsel for the center, said the appeals court would ultimately agree with the small businesses that faced irreparable harm of “the loss of critical suppliers and customers, forced and costly changes to established supply chains, and, most seriously, a direct threat to the very survival of these businesses.”
A separate federal court earlier on Thursday had also found Trump overstepped his authority in using the International Emergency Economic Powers Act for what he called reciprocal tariffs of at least 10% on goods from most U.S. trading partners and for the separate 25% levies on goods from Canada, Mexico and China related to fentanyl.
That ruling was much narrower, however, and the relief order stopping the tariffs applied only to the toy company that brought the case. The istration has appealed that ruling as well.
Uncertainty persists
Following a market revolt after his major tariff announcement on April 2, Trump paused most import duties for 90 days and said he would hammer out bilateral deals with trade partners.
But apart from a pact with Britain this month, agreements remain elusive, and the trade court’s ruling on the tariffs and the uncertainty of the appeals process may dissuade countries like Japan from rushing in to deals, analysts said.
“Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs — which can’t exceed 15% for the time being,” said George Lagarias, chief economist at Forvis Mazars international advisers.
The trade court ruling would have lowered the overall effective U.S. tariff rate to about 6%, but the appellate court’s emergency stay means it will remain at about 15%, according to estimates from Oxford Research. That is the level it has been since Trump earlier this month struck a temporary truce that reduced punishing levies on Chinese goods until late summer. By contrast, the effective tariff rate had been between 2% and 3% before Trump returned to office in January.
Trump’s trade war has shaken makers of everything from luxury handbags and sneakers to household appliances and cars as the price of raw materials has risen.
Drinks company Diageo and automakers General Motors and Ford are among those that have abandoned forecasts for the year ahead.
Non-U.S. companies including Honda, Campari, Roche and Novartis have said they are considering moving operations or expanding their U.S. presence to mitigate the impact of tariffs.
(Reporting by Summer Zhen, Samuel Indyk and Sarah Marsh; Additional reporting by Luc Cohen, Doina Chiacu, Nicholas P. Brown and David Ljunggren; Writing by Joseph Ax, Jonathan Allen, Dan Burns and Barbara Lewis; Editing by Catherine Evans, Giles Elgood, Nick Zieminski and Matthew Lewis)