The legality of most of the tariffs imposed by U.S. President Donald Trump on countries worldwide faces a significant legal challenge on Thursday. The U.S. Court of Appeals for the Federal Circuit is set to hear two lawsuits contesting the 25 per cent tariff imposed by Trump on imports from Canada and Mexico in March and the “Liberation Day” tariffs imposed on nearly all other countries in April. The core question revolves around the validity of Trump’s rationale for the tariffs, given the constraints on the president’s authority to impose duties on foreign nations.
This legal battle holds global economic ramifications, according to Todd Tucker, the director of industrial policy and trade at the Roosevelt Institute. Tucker highlighted that Trump’s disruptive trade policies are unprecedented since the 1930s. The outcome of the cases could potentially restore stability to the global economy.
The lawsuits involve a coalition of five small businesses led by a New York wine importer challenging the Liberation Day tariffs and twelve states led by Oregon challenging both the Liberation Day tariffs and the tariffs on Canada and Mexico. These plaintiffs secured a favorable ruling at the U.S. Court of International Trade in late May, where it was determined that Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) when imposing the tariffs.
The IEEPA grants the president emergency economic powers to address threats to national security, foreign policy, or the economy. The Trump administration argues that the flow of fentanyl across the northern border poses an extraordinary threat, justifying the tariffs on Canada. However, the Court of International Trade rejected these arguments, stating that the tariffs did not effectively address the cited threats.
The ongoing legal battle is poised to set a precedent as no previous president has used the IEEPA to impose tariffs. The case is of significant national importance, with the prospect of reaching the U.S. Supreme Court regardless of the appeals court ruling expected in the coming weeks. The outcome could have far-reaching implications for both U.S. trade policy and global economic stability.