Trump Wins Tariff Reprieve as Trade Agenda Faces Rollback (3)

A federal appeals court offered President Donald Trumpa temporary reprieve from a ruling threatening to throw out the bulk of his sweeping tariff agenda, giving at least some hope to a White House now facing substantial new restrictions on its effort to rewrite the global trading order.

The administration celebrated the order from the US Court of Appeals for the Federal Circuit as validating its vow to aggressively challenge a ruling issued Wednesday night by the Court of International Tradeblocking sweeping parts of Trump’s tariffs over his use of the International Emergency Economic Powers Act, or IEEPA.

White House officials also stressed Trump has options to pursue similar tariffs through other authorities if appeals ultimately fall short, even as they planned to continue defending the legality of the IEEPA tariffs to the US Supreme Court.

However, for a president eager to use trade policy to quickly reshape global commerce, other options would be more complicated, and bind the threats he’s able to wield in the negotiation process with other world leaders. Some alternative US tariff options are laborious to use and would take months to execute, while others are capped in scope and duration.

Trump hailed the appeals court ruling in a social media post on Thursday night, while calling the original decision “so wrong and so political!” He claimed that seeking congressional approval for tariffs would hinder his trade agenda and “completely destroy Presidential Power.”

“Hopefully, the Supreme Court will reverse this horrible, Country threatening decision, QUICKLY and DECISIVELY,” Trump said in the post.

Despite the temporary stay, the possibility that the appeals court could ultimately back the original ruling and block Trump’s tariff policy hung heavy over the White House. Separately, a second federal judge declared a number of Trump’s levies enacted using emergency powers unlawful, but limited his decision to the family-owned business that sued and delayed the order from taking effect for 14 days to allow the Justice Department time to appeal.

“America cannot function if President Trump — or any other president, for that matter — has their sensitive diplomatic or trade negotiations railroaded by activist judges,” White House Press Secretary Karoline Leavitt said Thursday. “Ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.”

Read more: Appeals Court Allows Trump Tariffs to Stay in Effect for Now

The original court ruling would have provided the administration just 10 days to unwind the levies. But the new order laid out a briefing schedule that runs through June 9 to decide on the request for a longer-term stay. If granted — or if a subsequent appeal to the Supreme Court was granted — the tariffs could remain in place for months.

For all of the confidence on Trump’s team, Wednesday’s initial court ruling marked one of the biggest setbacks of the president’s second term. Trump campaigned on using tariffs to combat what he calls other nation’s unfair treatment of the US, and the emergency law gave him the fastest avenue to deliver on his pledge.

The ruling would reduce the effective US tariff rate to below 6% from a high of almost 27% last month, according to Bloomberg Economics calculations, an astronomical level that risked stagflation for the US.

Source: Bloomberg Economics

The legal fight also threatens to inject even more uncertainty into a world economy already rattled by Trump’s ever-changing posture on import taxes. It may sap Trump’s leverage as his team negotiates with numerous trading partners seeking tariff relief.

GLOBAL REACT: Court Nixes Two-Thirds of Trump Levies For Now

The trade court decision on Wednesday blocked tariffs on Mexico, Canada, China as well as a flat import tax on almost every US trading partner. Trump invoked the IEEPA on the grounds that fentanyl and trade deficits are each emergencies necessitating the broad use of executive power. The court ruled he went too far.

The White House on Thursday said it is looking at other options, but advisers acknowledged the potential for them being more time-consuming.

Read more: Trump’s Trade War and the Economic Impact: Tariff Tracker

“There are different approaches that would take a couple of months to put these in place and using procedures that have been approved in the past or approved in the last administration, but we’re not planning to pursue those right now,” National Economic Council Director Kevin Hassett said on Fox Business.

Yet amid mounting concern about the vulnerability of Trump’s IEEPA-based tariffs, the administration has already embraced separate legal authorities to pursue other levies.

US President Donald Trump

Photographer: Chris Kleponis/CNP/Bloomberg

The Trump administration has invoked Section 232 of the Trade Expansion Act to set the stage for sweeping levies that could touch everything from smartphones to jet engines.

Since Trump took office in January, the Commerce Department has already enacted Section 232 tariffs on steel, aluminum, vehicles and auto parts, and launched investigations on trucks, copper, lumber, semiconductors, critical minerals, pharmaceuticals and aircraft.

Those tariffs are seen as less legally vulnerable than Trump’s ad-hoc nation-by-nation approach, but take months to enact. The probes typically produce findings within 270 days, but administration officials have stressed they can go faster.

“I can assure you, American people, that the Trump tariff agenda is alive, well, healthy, and will be implemented to protect you, to save your jobs and your factories,” trade adviser Peter Navarro told reporters on Thursday.

Navarro said that US Trade Representative Jamieson Greer would address other avenues soon. “Any trade lawyer knows it’s just a number of different options we can take,” Navarro said.

A shift in strategy could be time-consuming, dragging out both the uncertainty of Trump’s tariff policy and the timeline for him to see some domestic political impact.

Ticking Clock

“The idea that Trump is going to turn to plan B and do tariffs by other means has problems,” said James Lucier, managing director at the research firm Capital Alpha Partners. “Yes, he will do it. But he is running out of time to do tariffs and get results before the midterm elections.”

Even so, taking the time to build an ironclad case for tariffs using other legal authorities is key to ensuring they survive court scrutiny and, perhaps, future elections, analysts said.

“If Trump jumps through the hoops and does all the paper for Section 232 tariffs, then he may have tariffs that are legally sustainable,” Lucier said. “If he wants to complete a sloppy pro forma process in six weeks, the same deep-pocketed anti—tariff folks who came after him on IEEPA will come after him on 232.”

The trade court’s ruling also nodded to Section 122 powers — which Trump could use to impose tariffs on nations of as much as 15%, but only for about five months — as another avenue. Navarro conceded the administration had avoided doing so originally because of restrictions on how long those tariffs could remain in place.

“Well, Section 122, only gives you 150 days. So there’s your answer right there,” he told Bloomberg Television.

Trump has also used authorities under Section 301 of the US Trade Act of 1974 to enact previous tariffs on China. Whether he will now try to enact more duties through that authority, including on China, is unclear.

Section 301 empowers presidents to take a range of actions — not just tariffs — to address unfair policies seen as restricting US commerce. Affected industries have previously sought Section 301 investigations on shipbuilding, solar and other imports, but a president can initiate those probes on his or her own.

Investigations on auto and steel tariffs dating back to his first four years in office allowed Trump to move more quickly on those levies than on other sectors where he was starting from scratch.

One other option is that Trump could go to Congress for tariff approvals. However such a move would at minimum delay tariffs, and could also risk some of his levies on allied nations failing to gain approval in a closely-divided House and Senate. Such a move would also take valuable floor time that could be used on other priorities, such as approving Trump’s judicial and other nominees, or enacting legislation on tax cuts.

“In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly,” Trump said.

(Updates with additional details of other tariff options starting in third paragraph.)

--With assistance from Greg Stohr, Akayla Gardner, Rana Sajedi (Economist), Maeva Cousin (Economist), Meghashyam Mali, Laura Curtis, Tom Orlik (Economist), Annmarie Hordern, Jonathan Ferro and Erik Larson.

To contact the reporters on this story:
Josh Wingrove in Washington at jwingrove4@bloomberg.net;
Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net

To contact the editors responsible for this story:
Justin Sink at jsink1@bloomberg.net

Jordan Fabian, Derek Wallbank

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