The United States Court of Appeals for the Federal Circuit has suspended the lower court’s previous ruling that the Trump administration imposed tariffs beyond its authority, allowing the tariffs to remain in effect during the government’s appeal. The US Court of International Trade ruled on Wednesday that Trump’s act of imposing extensive tariffs under the International Emergency Economic Powers Act was unconstitutional and demanded an immediate halt to the relevant measures.
The tariffs affected by this ruling involve most of the US trading partners, including the additional tariffs imposed on goods from Canada, Mexico and China. The Trump administration said it would appeal and might use other presidential powers to ensure the implementation of tariffs.
The insurance industry is assessing the impact of tariffs on multiple areas. AM Best warns that tariffs may lead to changes in the credit ratings of insurance companies. Although the market reacted cautiously to the ruling, analysts pointed out that there is still a high degree of uncertainty in the future. The tariffs previously imposed by the Trump administration have cost enterprises more than 34 billion US dollars.
Tariffs on some industries (such as steel and aluminium) are not affected by this ruling for reasons of national security. The litigant, the Center for Free Justice, said that the suspension by the appellate court was a procedural step and would eventually support small businesses affected by tariffs.
Another federal court also ruled on Thursday that Trump exceeded his authority, but only exempted the toy company that filed the lawsuit from tariffs. At present, the Trump administration has postponed most tariffs for 90 days to seek a bilateral agreement, but analysts believe that legal uncertainties may complicate the negotiations. Oxford Research estimates that if the ruling takes effect, the overall tariff rate in the United States may drop from 15% to 6%, but the rate of the appellate court’s moratorium order remains the same.
Affected by the trade war, many multinational enterprises are adjusting their business layouts to cope with rising costs, including Diageo and General Motors. Non-us enterprises such as Honda and Roche are also considering transferring production capacity to the United States to avoid tariff risks.
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