The US Court of Appeals for the Federal Circuit has temporarily allowed the continuation of tariffs imposed under former President Donald Trump’s emergency powers, despite a recent federal trade court ruling that declared these tariffs unlawful.
On Thursday, just one day after the US Court of International Trade ruled that Trump exceeded his authority by imposing sweeping tariffs on foreign imports, the appeals court granted a stay to pause that ruling while the White House appeals the decision.
The tariffs, introduced under the International Emergency Economic Powers Act (IEEPA) on April 2, targeted imports from numerous countries, including up to 50% duties on those with significant trade surpluses against the US and a baseline 10% tariff on most others. Although Trump had paused the higher tariffs for 90 days to facilitate negotiations, the lower tariffs remained in effect.
The trade court had found that Trump unlawfully invoked emergency powers because the US trade deficits, ongoing for nearly 50 years, did not constitute an urgent or unforeseen crisis warranting such action. The ruling emerged from consolidated lawsuits filed by five small businesses and 12 US states. Jeffrey Schwab, senior counsel at the Liberty Justice Center representing the small businesses, stated, "The court saw through the attempt to bypass Congress by using IEEPA unilaterally."
Complicating the matter further, US District Judge Rudolph Contreras issued a more limited ruling blocking the tariffs applied to two educational toy companies based in Illinois.
Regardless of the outcome on the IEEPA tariffs, other tariffs introduced during Trump's first term, particularly those targeting Chinese imports due to alleged unfair trade practices, remain intact under the Biden administration.
Analysts at Capital Economics suggest that if the IEEPA tariffs are permanently lifted, US economic growth could improve, potentially reaching a 2% annual rate by late 2025, up from an earlier forecast of 1.5%, with inflationary pressures easing.
Furthermore, importers might eventually receive refunds for IEEPA tariffs previously paid if the trade court’s decision is upheld. However, experts like Peter Harrell from the Carnegie Endowment caution that refunds are unlikely until all appeals are resolved.
