Court Ruling Challenges Presidential Authority

On May 28, 2025, the U.S. Court of International Trade ruled that former President Donald Trump exceeded his legal authority by imposing tariffs under the International Emergency Economic Powers Act (IEEPA). The court emphasized that only Congress holds the constitutional power to regulate foreign commerce, thereby invalidating most of Trump's tariffs imposed since January.

Potential Legal Avenues for Tariff Implementation

Despite the setback, experts believe Trump may pursue alternative legal avenues to continue his tariff-based trade strategy:

• Section 122 of the Trade Act of 1974: Allows the president to impose up to 15% tariffs for a limited six-month period without needing formal processes.
• Section 301: Enables tariffs after investigations into unfair trade practices, as was used in the 2018-2019 trade war with China.
• Section 232: Permits tariffs based on national security grounds and has already been applied to steel, aluminum, and possibly pharmaceuticals and semiconductors.
• Section 338 of the Tariff Act of 1930: Allows duties up to 50% on imports from nations that discriminate against U.S. commerce, without requiring investigation.

Market Reactions and Economic Implications

The legal uncertainty surrounding the tariffs has created confusion in global markets. On May 29, 2025, markets were rattled by the initial court ruling, only for an appeals court to temporarily reinstate the tariffs. This back-and-forth has led to volatility and concerns over the long-term impact of these policies.

Conclusion

While the court ruling challenges the foundation of Trump's tariff strategy, it does not necessarily signal its end. With several legal mechanisms still available, Trump may continue to pursue his trade policies, albeit through different channels. Businesses and foreign governments should remain vigilant and prepare for potential shifts in U.S. trade policy.

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