Media

Key Takeaways:

• On May 29, the U.S. Court of Appeals for the Federal Circuit stayed a May 28 decision issued by the U.S. Court of International Trade (CIT) that would have vacated President Trump’s IEEPA-related tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA). The appellate court will now consider the Trump administration’s emergency stay motion of the CIT ruling. The stay is expected to remain in effect through mid-June.
• The legal status and operational future of President Trump’s IEEPA-based U.S. tariffs—which are the centerpiece of his “reciprocal” and “universal” tariff approaches—remains in question. The CIT judges found that most of President Trump’s sweeping tariffs on U.S. trading partners lacked sufficient legal authority under IEEPA.
• The impact on ongoing tariff negotiations may vary by trading partner. Most Asian nations are likely to continue negotiating but may feel that they have enhanced leverage. The original CIT ruling would have reversed the 10 percent universal tariff on all countries, along with the additional 20-50 percent reciprocal tariffs, and the fentanyl tariffs on Canada, China, and Mexico. However, the CIT did not address Section 232 sectoral tariffs or the ongoing Section 301 probes. This means that some countries like Japan and South Korea—whose top industries are significantly vulnerable to those measures— will continue to face considerable negotiating challenges.
• Despite the legal uncertainties, the Trump administration is trying to take a business-as-usual approach, continuing scheduled negotiations and reminding trade partners that it has other tools at its disposal. Still, some U.S. trade partners may drag their feet as they wait for more clarity.