By Dietrich Knauth and Nate Raymond
(Reuters) -A federal appeals court allowed President Donald Trump’s most sweeping tariffs to remain in effect on Tuesday while it reviews a lower court decision blocking them on grounds that Trump had exceeded his authority by imposing them.
The decision by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. means Trump may continue to enforce, for now, his “Liberation Day” tariffs on imports from most U.S. trading partners, as well as a separate set of tariffs levied on Canada, China and Mexico.
The appeals court has yet to rule on whether the tariffs are permissible under an emergency economic powers act that Trump cited to justify them, but it allowed the tariffs to remain in place while the appeals play out.
The Federal Circuit said the litigation raised issues of “exceptional importance” warranting the court to take the rare step of having the 11-member court hear the appeal, rather than have it go before a three-judge panel first. It scheduled arguments for July 31.
The tariffs, used by Trump as negotiating leverage with U.S. trading partners, and their on-again, off-again nature have shocked markets and whipsawed companies of all sizes as they seek to manage supply chains, production, staffing and prices.
The ruling has no impact on other tariffs levied under more traditional legal authority, such as tariffs on steel and aluminum imports.
A three-judge panel of the U.S. Court of International Trade ruled on May 28 that the U.S. Constitution gave Congress, not the president, the power to levy taxes and tariffs, and that the president had exceeded his authority by invoking the International Emergency Economic Powers Act, a law intended to address “unusual and extraordinary” threats during national emergencies.
The Trump administration quickly appealed the ruling, and the Federal Circuit in Washington put the lower court decision on hold the next day while it considered whether to impose a longer-term pause.
The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the duties and the other by 12 U.S. states.
Trump has claimed broad authority to set tariffs under IEEPA. The 1977 law has historically been used to impose sanctions on enemies of the U.S. or freeze their assets. Trump is the first U.S. president to use it to impose tariffs.
Trump has said that the tariffs imposed in February on Canada, China and Mexico were to fight illegal fentanyl trafficking at U.S. borders, denied by the three countries, and that the across-the-board tariffs on all U.S. trading partners imposed in April were a response to the U.S. trade deficit.
The states and small businesses had argued the tariffs were not a legal or appropriate way to address those matters, and the small businesses argued that the decades-long U.S. practice of buying more goods than it exports does not qualify as an emergency that would trigger IEEPA.
At least five other court cases have challenged the tariffs justified under the emergency economic powers act, including other small businesses and the state of California. One of those cases, in federal court in Washington, D.C., also resulted in an initial ruling against the tariffs, and no court has yet backed the unlimited emergency tariff authority Trump has claimed.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Howard Goller)
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