It had seemed in recent months that there was no constraint on the actions of US president Donald Trump in implementing his far-reaching agenda. The normal checks and balances from the US Congress and the courts simply did not seem to apply.
Now, however, Trump’s plans have hit trouble . It has been clear for many years that the US president has some leeway in imposing tariffs – or import taxes – without having to seek Congressional approval. However, a federal court has now ruled that Trump has gone too far and did not have the legal power to impose unilateral tariffs on all trading partners, as he did in April, because of the large US trade deficit on goods.
A decision by a federal appeals court later on Thursday put a stay on the trade courts decision, meaning the administration can continue to collect tariffs for now. This provides some leeway for the president but still means there is an uncertain outlook for his tariffs agenda, unless the original trade court decision can be overturned.
This judgement would not entirely remove the president’s ability to set tariffs without getting the go-ahead from Congress. For example, he may still be able to do so in specific sectors where he has instituted studies – such as pharma and tech – and can point to a threat to US national security. He may also be able to call on other pieces of US legislation in some limited cases. But unless the court decisions are overturned, there will be no repeat of the “Liberation Day” performance, even if the tariffs now in place can continue to be collected for now.
The administration has, predictably, reacted angrily, with senior figures referring to “unelected judges” and a “judicial coup.” In reality, the court was just doing its job, interpreting the law and underlining the traditional balance between the White House and Congress. The administration will appeal the decision, but Trump’s tactics of throwing around threats of blanket tariffs – such as the recent talk of a 50 per cent charge on EU imports – is now undermined, at least for now.
The wider impact on the trade talks between the US and EU is unclear. Trump can still threaten sectoral tariffs. And can conceivably try to up the pressure on the EU in a range of other ways. For now, the message is that the talks will continue, even if the backdrop to them has now changed. The EU may feel in less of a rush to respond to Trump’s demands and deadlines. However, Europe will still want to see if it can inject some clarity and certainty into the trade and wider economic relationship.
It may struggle to do so. Trump is unlikely to back off from his disruptive agenda. Against this backdrop, the EU should not be in any hurry to make significant concessions.
Trump’s economic agenda is running into serious difficulties. The economy is slowing and the markets are looking quizzically at the draft budget bill passing through Congress. Now a hole has been blown in the plan to raise significant revenue through tariffs. Trump’s crazy economic agenda is slowly but surely unravelling. He will lash out again, for sure, but the EU can afford to take its time and try to strike a deal in its own best interests.
