BREAKINGVIEWS-Tariff strike-down widens the US omni-crisis

By Gabriel Rubin

WASHINGTON, May 29 (Reuters Breakingviews) - The Trump administration’s norm-bending ranges from the dismantling of the global trade system to defiance of the co-equal legal apparatus of the U.S. government. An international trade court ruling on Wednesday striking down sweeping tariffs imposed on trading partners threatens to combine these crises. The White House poses levies as a fix for various ills central to its agenda, making this setback critical. The range of possible outcomes now widens significantly, depending in turn on whether legal appeals succeed, how the president responds to them, or if legislators step in. Investors and firms just getting to grips with recent chaos must contend with a new bout of unpredictability.

For now, the trade court’s ruling leaves the administration 10 days to stop collecting most tariffs imposed thus far, including a 10% global retaliatory duty and separate “national security” levies imposed on Canada, Mexico, and China. President Trump still retains significant power to ratchet fees back up, and existing tariffs on steel, aluminum and cars are unaffected. The ruling also lays out that a 1974 trade law enables temporary levies of up to 15% for up to 150 days.

The administration appealed on Wednesday evening, and the urgency of the matter probably ensures speedy proceedings - after all, the first hearing in this case was just two weeks ago. The Supreme Court, the nation’s top legal body, has shown the White House some deference in the past, particularly over the conduct of foreign policy. However, President Trump’s response to a case over a wrongfully deported man shows that consequences can continue after pushback. Regular attacks on federal judges set a worrying precedent.

It's one that's difficult for investors to price. Stock markets brutalized by Trump’s initial tariff barrage had recovered after a series of climbdowns. A trade deal struck with the UK offered at least a hazy blueprint for ending the whipsaw of changeable whims, even if further agreements will be harder. And revenue from levies, reaching an all-time high of $16 billion in April, was one of few sops to concerns about bulging deficits as bond markets squirm over the rest of the president's agenda.

All of this is in the air. Negotiators in Europe and elsewhere, for the moment, face a muddled counterparty. Ad hoc attempts to rebuild tariffs will take time and invite a frenzied round of lobbying.

Of course, Congress could resolve the legal issue by reasserting its trade authority. The powers Trump enjoys have been delegated to him and could be revoked. Legislation instituting a 60-day review process for new tariffs has budding Republican support in the Senate, where seven members of the president’s party have signed on. In the battle between the judicial and executive branches, the best outcome would be for the legislature to break the tie.

Follow @Rubinations on X

CONTEXT NEWS

A US international trade court ruled on May 28 that the Trump administration exceeded its authorities under a 1977 emergency law to impose tariffs on nearly all global trading partners. The court ruled that the president could not impose tariffs as currently structured as a remedy under the law, though he retains other trade authorities that could be used to implement similar levies.

The court ordered the administration to pause “Liberation Day” tariffs now set at 10% as well as levies ostensibly responding to the fentanyl crisis on China, Canada, and Mexico within 10 days. The administration immediately appealed the ruling.