Trump officials downplay court ruling that blocked sweeping tariffs

Senior Trump administration officials on Thursday downplayed the impact of a U.S. trade court ruling that blocked the most sweeping of President Donald Trump’s tariffs, expressing confidence it would be overturned on appeal and insisting there are other legal avenues to employ in the interim.

Financial markets, which have whipsawed wildly in response to every twist and turn in Trump’s chaotic trade war, reacted with cautious optimism on Thursday, a day after the U.S. Court of International Trade ruled that Trump overstepped his authority in imposing punitive tariffs on virtually every country in the world.

But analysts said broad uncertainty remained regarding the future of Trump’s tariffs, which have cost companies more than $34 billion in lost sales and high costs, according to a Reuters analysis.

Meanwhile, a second U.S. court issued a preliminary ruling against the tariffs on Thursday, temporarily blocking them from going into effect in a case brought by educational toy maker Learning Resources.

U.S. District Court Judge Rudy Contreras issued a narrower decision that did not block the tariffs completely, but he stopped the tariffs from being levied on the toy company and ruled that its challenge could remain in his Washington, D.C. federal court.

The administration immediately asked an appeals court to stay Wednesday’s trade court ruling and allow the tariff regime to remain in place. Trump has put tariffs at the center of his effort to extract concessions from U.S. trading partners, including traditional allies such as the European Union.

White House economic adviser Kevin Hassett expressed confidence that the ruling would ultimately be reversed in an interview with Fox Business Network on Thursday. He also said it would not get in the way of signing new trade deals.

“If there are little hiccups here or there because of decisions that activist judges make, then it shouldn’t just concern you at all, and it’s certainly not going to affect the negotiations,” Hassett said.

Indeed, at least two sets of scheduled trade talks appeared unaffected by the ruling. Japan’s trade negotiator is scheduled to meet with U.S. Treasury Secretary Scott Bessent in Washington on Friday for a fourth round of talks, while India still plans to send a trade team to Washington next week for talks, an India trade official told Reuters.

White House trade adviser Peter Navarro, a staunch proponent of higher tariffs, told Bloomberg TV that the Trump administration could rely on other laws to implement import taxes if the court’s decision remains in place.

Trump had invoked the International Emergency Economic Powers Act (IEEPA), a law intended to address threats during national emergencies, to impose tariffs on almost every U.S. trading partner, raising fears of a global recession. The president temporarily suspended many of the tariffs until early July after markets swooned in response.

The court found that the emergency powers law does not grant Trump the unilateral power to order such sweeping tariffs. Some sector-specific tariffs, such as those Trump has imposed on steel, aluminum and automobiles, were imposed under separate authorities on national security grounds and were unaffected by the ruling.

Canadian Prime Minister Mark Carney welcomed the decision, saying it was “consistent with Canada’s longstanding position” that Trump’s tariffs were unlawful.

Other U.S. trading partners offered careful responses. The British government said the ruling was a domestic matter for the U.S. administration and noted it was “only the first stage of legal proceedings.”

Both Germany and the European Commission said they could not comment on the decision.

UNCERTAINTY PERSISTS

Several analysts said it was preliminary to conclude this closes the door entirely on Trump’s sweeping tariffs, with legal paths other than IEEPA likely at his disposal.

“We suspect the administration will lean on other legal authorities to maintain tariff levels around current levels,” Bernard Yaros, lead U.S. economist at Oxford Economics, wrote in a note to clients on Thursday.

Some businesses and industry groups expressed exasperation amid continued uncertainty about how the tariff saga will play out.

The ruling is “just another chapter in this difficult journey toward a clear, consistent and strategic trade policy,” said Jonathan Gold, vice president of supply chain for the National Retail Federation trade group.

After prompting an initial surge in stocks in Asia, the ruling stimulated more muted reactions in Europe, where indexes were largely flat, and in the U.S., where gains were modest. The S&P 500 was up about 0.4%, having given back more than half of its initial rise at the opening bell.

An early rally in the dollar also fizzled and the greenback was about 0.5% lower against a basket of major trading partner currencies. Bond yields also declined.
Following a market revolt after his major tariff announcement on April 2, Trump paused most import duties for 90 days and said he would hammer out bilateral deals with trade partners.

But apart from a pact with Britain this month, agreements remain elusive, and the court’s suspension of the tariffs may dissuade countries like Japan from rushing into deals, analysts said.

“Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs – which can’t exceed 15% for the time being,” George Lagarias, chief economist at Forvis Mazars international advisers, said.

Trump’s trade war has shaken makers of everything from luxury handbags and sneakers to household appliances and cars as the price of raw materials has risen, supply chains have been disrupted and company strategies redrafted.