Court ruling adds uncertainty to Trump’s tariff powers

Current tariff overview:

Tariff delay, China tensions, steel hike

Trump agreed last week to extend the EU tariff negotiation deadline to 9 July after threatening to raise duties to 50%. Meanwhile, tensions with China have reignited after the White House accused Beijing of violating a recent truce by failing to roll back non-tariff trade restrictions. China responded with diplomatic pushback. Separately, Trump announced a major increase in global steel tariffs — doubling them from 25% to 50% starting on 4 June — under Section 232, citing national security concerns and the need to protect domestic industry.

Court ruling on emergency tariffs

The federal US Court of International Trade (CIT) ruled that President Trump overstepped his authority by imposing the broader “Liberation Day” tariffs under the 1977 International Emergency Economic Powers Act (IEEPA). These included the 10% global tariffs, the 25% duties on certain fentanyl-producing countries (like Canada and Mexico), the “reciprocal” tariffs based on trade surpluses, and the 30% tariffs on China.

The court found that IEEPA does not grant the president unbounded tariff powers, emphasising that the Constitution reserves this authority to Congress. The ruling concluded that such tariffs must address a specific “unusual and extraordinary threat” tied to a declared emergency.

The administration immediately appealed to the US Court of Appeals for the Federal Circuit, which issued an administrative stay allowing tariffs to remain in place temporarily.

The timeline includes:

• 5 June: Plaintiff response deadline
• 9 June: Government reply deadline

What happens next:

If the court grants a longer stay: the tariffs will likely remain in force for several more months as the appeal proceeds — potentially through a Supreme Court review, as the losing side at the Federal Circuit can appeal.

If the court does not grant a longer stay: the original CIT ruling takes effect, and the tariffs could be struck down, pending any further emergency motion or Supreme Court intervention.

Legal limits and other tariff tools The CIT ruling narrowed Trump’s authority under IEEPA and reaffirmed Congress’ constitutional control over trade. However, several alternative tariff tools remain available:

• Section 232 – Allows tariffs on national security grounds; existing measures on steel, aluminium, autos, and auto parts remain in force. New investigations target sectors like semiconductors, pharmaceuticals, and critical minerals. 
• Section 301 – Enables tariffs in response to unfair trade practices (e.g., targeting China).
• Section 122 – Permits short-term tariffs up to 15% for 150 days on countries with large trade surpluses, offering a faster option if IEEPA-based tariffs are blocked.

While IEEPA-based tariffs face extended legal review and could ultimately be decided by the Supreme Court, these other tools allow the administration to continue applying tariff pressure in parallel.

Impact on trade talks

The court ruling introduces new uncertainty into US trade policy, which could weaken leverage and delay progress on ongoing and future trade negotiations:

• Trading partners may wait: The EU had stepped up negotiations after Trump’s tariff threats but may now hold off until legal clarity emerges — especially with the 5 June hearing and the 9 July deadline looming. 
• Existing deals under review: The UK-US tariff deal signed earlier this month now faces uncertainty, as the challenged 10% blanket tariff could undermine parts of the agreement before implementation.
• Reduced leverage: While the Trump Administration can still use Sections 301 and 232, they require lengthy investigations, weakening the administration’s ability to impose immediate pressure.

Rather than backing down, the administration may escalate the use of alternative tools or even seek new tariff powers through Congress. Meanwhile, international partners may grow wary of US commitments, and prolonged legal uncertainty could dampen investment and complicate companies’ strategic planning further.

What to look for next week

• Progress (or lack thereof) in EU-US and China-US negotiations ahead of the 9 July deadline
• Any Supreme Court developments regarding the IEEPA appeal and the next IEEPA hearing on 5 June
• Use of alternative legal pathways like Section 301 or 232 for new tariffs
• Steel and aluminium tariffs increase on 4 June

Get in touch

Business Sweden has extensive experience in tariff scenario analyses, localisation evaluations, and supplier assessments. If you need support in assessing your supply chain or navigating the impact of these tariffs on your US operations, please contact Johan Karlberg.

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