Trump tariffs suffer staggering setback in U.S. court

A U.S. court delivered a sharp rebuke of President Donald Trump's trade policy on Wednesday, declaring he abused his authority and striking down many of his tariffs — at least for now.

The upshot for trading partners, including Canada: Certain specific tariffs on steel and aluminum remain in place, but gone, for now, are sweeping levies on entire countries.

The order by the Manhattan-based U.S. Court of International Trade quashes Trump's 10 per cent across-the-board tariff on most nations and his declaration of a fentanyl emergency to impose 25 per cent tariffs on numerous Canadian and Mexican goods.

The White House vowed to fight back with every available tool. This means an immediate appeal and Trump possibly turning to different legal weapons to fight his trade wars.

Nevertheless, this decision made history.

American courts tend to be deferential to presidents on trade policy, but Trump has tested their limits with a barrage of protectionist actions unlike anything in modern history. 

One U.S. trade lawyer called this the most significant legal defeat of a president on trade policy in decades, with the possible exception of certain court setbacks for Richard Nixon.

"It's by far the biggest decision in ages," Scott Lincicome told CBC News. "It's a very big deal. The only question is how long it lasts."

He predicted fallout on several fronts. The court said the U.S. Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the economy.

It said Trump abused the 1977 International Emergency Economic Powers Act (IEEPA) to apply his fentanyl tariffs on Canada and Mexico, as well as his worldwide tariffs.

"We do not read IEEPA to delegate an unbounded tariff authority to the president," said the 49-page decision. "The challenged [tariffs] will be vacated and their operation permanently enjoined."

The court gave the administration 10 days to implement its order.

One of Lincicome's predictions is that some countries will now feel less urgency to negotiate tariff deals with Trump. Another prediction? Expect a gusher of goods to flow into the U.S. soon — especially at the land borders with Canada and Mexico — as importers take advantage of this potentially temporary lull in Trump's trade wars, pending a higher court decision. 

"The June import stats are going to be wild," said Lincicome, vice-president of general economics at the Cato Institute, a Washington-based think-tank.