A lower court in the US has heard oral arguments over US President Donald Trump’s authority to impose new tariffs after it was determined that he had overstepped his bounds by imposing massive new import taxes.
The president’s claim to have emergency powers on the side of the appeals court on Thursday raised questions as to whether what Trump calls his “reciprocal” tariffs, which were announced in April, were justified.
Arguments are being heard by a panel of all the court’s active judges, which includes members of the Democratic and Republican presidents, who have been appointed eight and three each.
The judges on the US Court of Appeals for the Federal Circuit in Washington, DC, pressed government lawyer Brett Shumate to explain how Trump was able to impose tariffs as a result of the IEEPA, a 1977 law that was previously used to impose sanctions on enemies or freeze their assets.
Trump is the first president to impose tariffs through IEEPA.
Shumate was frequently interrupted by the judges, who repeatedly questioned his arguments in vain.
One of the judges claimed that “IEEPA doesn’t even mention tariffs” and that it doesn’t even mention them.
According to Shumate, the law grants “extraordinary” authority in times of need, including the ability to completely stop imports. He claimed that IEEPA permits tariffs because it “regulates” imports during a crisis.
The states and businesses that opposed the tariffs argued that the US Constitution grants Congress, and not the president, control over tariffs and other taxes, and that they are against IEEPA.
The government’s claim that the word “regulate” includes the ability to tax would be a vast expansion of presidential power, according to Neal Katyal, a lawyer for the businesses.
As customs duties in June quadrupled to a record amount, reaching $ 27 billion in revenue, and have over $ 100 billion through June for the fiscal year that ends on September 30, the federal government is starting to realize this revenue. In a Trump-supported bill that was passed and signed into law this month, that income might be crucial to making up for lost revenue from extended tax cuts.
Trump wrote in a social media post on Thursday that “taxes are making America GREAT & RICH again.” Good luck in today’s significant case in America, to all of my excellent attorneys who have worked so hard to save our country.
However, according to economists, the duties could cause US consumers to see higher prices and lower corporate profits. Trump’s “on-again, off-again” tariff threats have shook the world’s financial markets and hampered US companies’ ability to control supply chains, production, staffing, and prices.
The tariffs are a “regressive tax,” according to Oregon attorney general Dan Rayfield, one of the states that are challenging the levies.
Companies ranging from Stellantis to American Airlines temporarily suspended their financial guidance after Trump started imposing his wave of tariffs, which has since been revised down. Companies from a variety of industries, including Procter and Gamble, the largest consumer goods brand in the world, made the announcement this week that it would need to raise prices for a quarter of its products.
In his second term, the president has aggressively used tariffs as leverage in trade negotiations and to counteract what he has termed unfair practices, making them a key component of his foreign policy.
pressure from the outside of business
Trump has claimed that the US’s most restrictive trade agreements from April are a result of persistent US trade imbalances and declining US manufacturing power. He’s used them, however, to put pressure on non-trade issues in recent weeks.
He imposed 50% tariffs on Brazil in response to Jair Bolsonaro’s prosecution, a key Trump ally who is accused of staging a coup after losing the 2022 presidential election.
Trump also threatened to sue Canada for refusing to recognize a Palestinian state, calling for a “very difficult” trade agreement.
He claimed that because China, Canada, and Mexico were not doing enough to stop fentanyl from crossing US  borders, tariffs against them was appropriate. That claim has been refuted by the nations.
The Democratic states and small businesses that are challenging Trump were joined on May 28 by a three-judge panel of the US Court of International Trade.
It claimed that tariffs on long-standing trade deficits were not permitted by IEEPA, a law intended to address “unusual and extraordinary” threats during national emergencies. The administration’s appeal has been considered, and the appeals court has allowed the tariffs to continue in effect. The court’s decision will come at an uncertain time, and the losing party will likely file an US Supreme Court appeal quickly.
The case won’t have an impact on tariffs levied by more traditional legal bodies, such as steel and aluminum duties. Following shorter-term trade agreements with Britain, Indonesia, and Vietnam, the president recently announced trade agreements that would set tariff rates on goods from the European Union and Japan.
According to Trump’s Department of Justice, limiting the president’s ability to impose tariffs could stifle ongoing trade talks, while other Trump officials claim that negotiations have continued without much change following the initial setback in court. Trump has set a Friday deadline for raising tariffs against nations that haven’t reached new trade agreements.
