Courting Chaos: Trump’s wide menu of legal options in the tariff war

On 2 April, President Donald Trump promised "Liberation Day." He stood in the Rose Garden in Washington, D.C., and announced a sweeping series of individualized tariff rates aimed at countries around the globe. These new "reciprocal" tariffs, he declared, would free the US from unfair trade practices of foreign partners, starting with the imposition of at least 10% on all imports on 5 April. To avoid paying tariffs of at least 10% and up to 50%, the Trump administration said foreign governments would be eager to engage in a series of trade negotiations with the White House.

IEEPA was also the justification for other actions taken from the start of Trump’s term.² He claimed that foreign imports of fentanyl from China, Canada, and Mexico were also an economic emergency.³ While the tariffs imposed on Canada and Mexico were largely suspended after negotiations, the US maintained a 20% tariff under IEEPA on all Chinese goods imported into the United States.

Several American firms and US states filed lawsuits against the use of IEEPA. Two different courts, the federal Court of International Trade (CIT) and the US District Court for the District of Columbia (USDC-DC), both ruled last week against the Executive branch.⁴ The CIT, a specialized court system designed to handle trade complaints, said on 28 May that neither trade balances nor fentanyl imports constituted an emergency under the statute. In addition, IEEPA did not clearly authorize the use of tariffs as a remedy, particularly as the US constitution delegates tariff and revenue collection authority to Congress, not the President. It therefore declared the use of tariffs under IEEPA to be invalid. Until Trump, IEEPA had never been used to impose tariffs.

Steel and aluminium tariffs are applied globally at 25%, although in the wake of the negative court rulings, Trump has threatened to double these rates starting on 4 June.⁶ Global auto and auto tariffs are currently set at 25%.

There are at least seven additional Section 232 investigations pending, including against pharmaceuticals, semiconductors, copper, lumber, heavy vehicles, critical minerals, and space products. These cases could be concluded at any time, with tariffs likely as a remedy.

Now that courts have ruled against the administration on IEEPA, the use of Section 232 is even more likely. If IEEPA is not to be used for the imposition of tariffs against trade partners, the White House will resort to alternative methods to achieve its objectives. This may include launching more Section 232 cases, expanding covered products under existing investigations, or changing tariff rates assessed under Section 232. The courts and Congress tend to be highly deferential to an executive branch claim of national security, which means that these Section 232 cases will be more likely to survive any future scrutiny of White House use of tariffs by the judicial and legislative branches.

It is also possible for Congress to get involved. IEEPA was struck down because the issues were not seen by CIT as national economic emergencies and opined that the executive branch was not authorized to use tariffs. But Congress could potentially declare both to be legal, paving the way for Trump to return to his preferred tool.

In short, Trump’s obsession with trade deficits in goods and his use of tariffs are unlikely to end anytime soon regardless of what may or may not happen in court over IEEPA.

All these changes have created additional headaches for US foreign trade partners. Some had already begun talks with the Trump administration since February over trade and tariff issues. The 2 April announcement of global tariffs spurred more negotiations, especially for governments with proposed "reciprocal" tariff rates above 40%.

Despite an apparently eager stream of foreign visitors to Washington, only one deal and one truce have been announced thus far. The first, a small agreement with the United Kingdom, was released on 8 May.⁹ The US and China announced a temporary truce, winding back the use of “reciprocal” tariffs to 10% and opening a new 90-day window for negotiations from 12 May.¹⁰

Others, however, that may have been tagged with "reciprocal" rates in the mid-20% range may find the opposite to be true. If the Trump team shifts to greater use of national security arguments against high-tech or other key sector exports or opens a comprehensive look into unfair trade practices, the net outcome could be worse than what was outlined on 2 April. These governments could suddenly have to shift into high gear to get pre-emptive adjustments made to future trade restrictions.

Hanging over all trade partners is the risk that the CIT decision is overturned, allowing IEEPA tariffs to continue. The 90-day pause is set to end on 9 July. It may be the case that these much higher tariffs get applied as originally outlined on that date. If the court system does allow Trump to use IEEPA, he might opt to widen or deepen tariff commitments for trade partners in the future.

Thus, the latest series of whiplash decisions on trade policy out of Washington shows little sign of getting resolved anytime soon. While trade partners may wish they could simply duck out of the way until they have greater clarity, this option is probably not in the cards either. Governments and firms will have to prepare for prolonged economic uncertainty.

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[1] https://www.congress.gov/crs-product/R45618
[2] The same Executive Order suspended the use of de mimimis for packages from China and Hong Kong.
[3] https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-proceeds-with-tariffs-on-imports-from-canada-and-mexico
[4] https://storage.courtlistener.com/recap/gov.uscourts.cit.17091/gov.uscourts.cit.17091.65.0.pdf and https://filehost.thompsonhine.com/uploads/USDC_DC_Contreras_IEEPA_Ruling_6263.pdf
[5] https://storage.courtlistener.com/recap/gov.uscourts.cafc.23106/gov.uscourts.cafc.23106.10.0.pdf
[6] https://time.com/7290211/trump-doubles-tariffs-steel-aluminum-backlash-experts-canada
[7] www.govinfo.gov/content/pkg/COMPS-10384/pdf/COMPS-10384.pdf
[8] https://www.hinrichfoundation.com/research/article/us-china/trump-america-first-trade-policy-memo
[9] https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal
[10] https://www.whitehouse.gov/briefings-statements/2025/05/joint-statement-on-u-s-china-economic-and-trade-meeting-in-geneva Note that the existing IEEPA 20% tariffs for fentanyl were not addressed in the de-escalation announcement.

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