After the US Court of Appeals for the Federal Circuit, in a major setback to the Trump administration, declared most of Donald Trump’s tariffs illegal on Friday (29th August). In response, the US President claimed that the removal of the tariffs would be a disaster.
Even though the court did not revoke the tariffs and gave the Trump administration time to appeal to the Supreme Court, it came down heavily on the Trump administration without mincing words. The court observed that Trump exceeded his powers in declaring national emergencies under the 1977 International Emergency Economic Powers Act (IEEPA), to justify his sweeping tariffs on almost every country on earth.
“It seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs,” said the court in a 7-4 ruling. The court observed that the US President possesses broad powers during a declared national emergency, but those powers do not expressly include imposing tariffs or similar taxes.
“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,” the judges said.
The IEEPA empowers the US President to regulate international commerce by imposing sanctions and freezing assets during a declared national emergency relating to foreign relations. The power has been delegated by Congress to the President to allow him to respond to external threats by regulating commercial transactions involving the US and other parties.
Removal of tariffs will destroy America: Trump
The court ruling prompted a lengthy response from the US President, who claimed that the decision, if allowed, would destroy the US. Accusing the court of being “partisan”, Trump wrote on Truth Social, “ALL TARIFFS ARE STILL IN EFFECT! Today, a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong.”
He justified the tariffs, saying that the US would not tolerate trade deficits and unfair tariffs that undermine the US farmers and manufacturers.
“The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and non-tariff trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. If allowed to stand, this Decision would literally destroy the United States of America,” he added.
Trump claimed that in the past, “unwise politicians” allowed tariffs to be used against the US and that his administration would use the tariffs to “Make America Rich, Strong, and Powerful Again!”. Accusing the judges of interfering with the President’s power regarding foreign policy, Attorney General Pam Bondi said that the administration will appeal to the Supreme Court against the decision.
Soon after assuming office at the beginning of the year, Trump announced that he would impose reciprocal tariffs on all countries. From April onwards, he imposed baseline tariffs of 10% on almost every country and up to 50% tariffs on countries with which the US runs trade deficits. He later revised the tariffs and his bizarre reciprocal tariffs on several countries, and in some cases, like India, the tariffs were imposed for reasons other than trade deficit. Recently, he doubled tariffs on India from 25% to 50% for buying oil from Russia.
Impact of the US Court’s decision on tariffs levied on India
As per reports, the punitive tariffs levied by the US on India are likely to remain unaffected even if the IEEPA-based tariffs are rolled back after court’s decision. This is because the after the initial phase of tariffs, Trump, anticipating judicial scrutiny, used a blend of legal framework, and not just emergency powers, to impose subsequent tariffs on India. Thus, Trump made sure that his tariffs on India remain unaffected even after a possible judicial intervention.
