A devastating defeat for Trump's tariffs: 'It’s chaos in every direction'
A unanimous court ruling has dealt a crushing blow to Donald Trump's flagship tariff policy, forcing the suspension of his sweeping 10% baseline global tariffs and undermining his leverage in ongoing negotiations.
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In brief:
- A US Court of International Trade unanimously ruled that President Trump exceeded his authority when imposing a 10% baseline global tariff under claims of "national emergency," forcing it to be suspended.
- The UK-US trade deal remains intact for now: The court ruling only affects the reciprocal 10% baseline tariffs and fentanyl-related tariffs on Canada, Mexico and China, though implementation could be delayed while the US deals with this legal challenge.
- The News Agents say the decision represents a "devastating defeat" for Trump's signature tariff policy, undermining his leverage in ongoing trade negotiations with the EU, China and other partners, and potentially derailing his plans to use tariffs to raise revenue and re-industrialise America.
What’s the story?
In an ironic turn of events, a US court has ruled that Donald Trump is not at liberty to impose his now infamous ‘liberation day’ tariffs.
The President introduced sweeping global tariffs, which typically should be approved by Congress, in a Rose Garden press conference in April, arguing he could do so due to a “national emergency.”
But the Court of International Trade has said otherwise, ruling that the President had exceeded his authority when he imposed a 10% baseline tariff worldwide, with significantly higher tariffs for specific countries.
The White House immediately responded to the verdict, claiming; "It is not for unelected judges to decide how to properly address a national emergency."
Within minutes the Trump administration filed a notice of appeal, meaning the decision could go all the way to the Supreme Court - which could be more Trump-friendly.
The country-specific tariffs were due to be implemented on 9 July, with the 10% worldwide tariffs - including on the UK - already in force. The White House now has 10 days to halt the tariffs, although most have already been suspended.
What does this mean for the UK-US trade deal?
A big question now is what the verdict means for the UK, which already struck a trade deal with the US this month, with Starmer and Trump both calling the deal “historic” in a gushing press conference.
But, the court ruling only applies to the reciprocal tariffs - that’s the 10% baseline worldwide tariffs - and the tariffs linked to fentanyl, which affect Canada, Mexico and China.
“This means on the face of it, the UK-US deal is unaffected” Sam Lowe, trade policy lead at Flint Global, an international business management consultancy, tells The News Agents.
That doesn’t mean it won’t have a knock-on effect on the UK though, with Lowe warning that the US could be distracted whilst dealing with the block to reciprocal tariffs, which could mean a delay in implementing the UK-US trade deal, which hasn’t begun yet.
The outcome of Trump’s appeal could also lead him to change his mind - as he so often does - on the deal struck with Starmer.
“If it’s the case Trump is unable to impose the 10% reciprocal tariff because he loses in the Supreme Court, where this will probably be appealed to, that could lead him to revisit the UK deal - although I think at the moment that’s a low probability,” Lowe says.
“The reason it could lead him to revisit the deal is because the terms of trade have changed. When it was negotiated there was an assumption this 10% would exist, it could make him rethink the concession he’s made on automotives - although I think it’s unlikely.”
What’s The News Agents’ take?
“You can be sure that Trump is bloody seething right now at the judgment that this Court has delivered,” Jon Sopel says.
Sweeping tariffs was Trump’s signature policy - and something he had a mandate for from the American public - but everything he promised, and his whole economic plan for America, is dwindling away after the verdict.
“I don't think there's any other way of describing this, other than being a devastating defeat for Trump,” Lewis Goodall says.
“He says that he wants to build a whole new economic model using tariffs. His argument from the start has been that they will raise hundreds of billions of dollars of revenue, and that they will help re-industrialise the American Rust Belt.
“That is now in tatters - at least for the short term.”
Trump has recently been aggressively imposing tariffs as he negotiates a series of trade deals - with the EU, with China and with other trade blocs around the world.
“These are the leverage that he needs in those negotiations. Where's the leverage now?” Lewis asks.
He adds that the court’s verdict reveals something fundamental about politics - that “politics is not showbiz”.
The Liberation day press conference - in which Trump stood in the rose garden and held up a huge board with tariffs figures listed country by country, row by row, was “a brilliant bit of showmanship,” Lewis says.
“There's no two ways about it - going through the list, country by country, it was funny. It made an impact. It made a political argument. It was potent.
“But when it comes to the implementation, there is total confusion, even among border officials about whether these tariffs, at this moment, should continue to be collected.
“It’s chaos in every direction. And if you want to affect political change, if you do want to change the economic model, you have to get your ducks in a row first - and they didn't.”
Jon thinks the most significant part of the ruling was that it was unanimous.
The ruling that came from the Court of International Trade, a highly specialised court based in New York was made by the three judges who were appointed by three cross-party presidents; Ronald Reagan, Barack Obama and Trump.
“I would think that if this goes to the Supreme Court - yes, there's a conservative majority, but there were two conservative appointed judges on this court that ruled last night.
“Presumably the interpretation of the law is pretty clear then; that Donald Trump isn't going to get any purchase, and maybe has to go back to the drawing board and rethink another way if you're going to impose these 10% tariffs.