Why was Trump's "reciprocal tariff" ruled "illegal"? What will happen next?

The U.S. Court of Appeals has ruled that Trump's tariffs on multiple countries are illegal, a decision that may "force" the White House to shift to Plan B—industry tariffs under the guise of national security.

According to CCTV News, on August 29 local time, the U.S. Court of Appeals ruled that most of the global tariff policies implemented by President Trump were illegal. The court stated that the "International Emergency Economic Powers Act" does not explicitly grant the U.S. president the authority to impose tariffs, and Trump's invocation of this law to impose tariffs exceeded his powers.

The report pointed out that the court halted tariffs imposed by Trump under the International Emergency Economic Powers Act, including the so-called "reciprocal tariffs" announced on April 2, as well as tariffs aimed at blocking fentanyl-related products.

Although ruled invalid, these tariffs will remain in effect until October 14 (UTC+8) to allow time for the U.S. Supreme Court to review the case. President Trump criticized the appellate court's decision on social media that day:

All tariffs remain in effect! The appellate court, "full of partisan bias," is wrong. If the tariffs are removed, it "will be a complete disaster" for the United States.

However, this ruling does not affect industry tariffs imposed by the Trump administration under other laws, especially Section 232 of the Trade Expansion Act of 1962, so the so-called industry tariffs on automobiles, steel, and aluminum are not included in this decision.

This means that as the so-called "reciprocal tariffs" face the risk of being overturned by the Supreme Court, the Trump administration may simultaneously expand the coverage of Section 232 tariffs in the future to ensure the continuation of its trade agenda.

Core of the Court's Decision: Limits of Presidential Power

The root of this legal dispute lies in the Trump administration's new interpretation of presidential powers.

Previously, the Trump administration invoked the 1977 International Emergency Economic Powers Act (IEEPA) to bypass Congress and directly implement a series of global tariffs under the pretext of responding to a national emergency.

In May this year, the U.S. Court of International Trade in New York had already preliminarily ruled this move illegal. The appellate court upheld the original verdict, with judges unanimously holding the core view that: the U.S. Constitution grants Congress the power to regulate foreign trade, and the president's emergency powers cannot override this.

However, the court provided a buffer period in its ruling. These additional tariff measures can remain in effect until October 14 (UTC+8) to allow the U.S. government to appeal to the Supreme Court.

This means that before the Supreme Court makes a final decision, the relevant tariff measures will continue to affect trading partners.

Whether the U.S. Supreme Court will accept the case and the possible timeline for the hearing will become key factors in determining the ultimate fate of these tariff measures.

White House Plan B: Industry Tariffs with a More "Solid" Legal Basis

Unlike the so-called "reciprocal tariffs," another "national security tariff" by the Trump administration has a more solid legal foundation.

U.S. national security tariffs target specific industries and are implemented under Section 232 of the Trade Expansion Act of 1962.

As a more mature and enduring standalone law, Section 232 authorizes the president to take trade restriction measures, including tariffs, when an investigation determines that imported products threaten national security.

Augustine Lo, a partner at Dorsey & Whitney law firm specializing in trade law, stated:

Section 232 is a tried and tested reliable method. Historically, courts have given the president considerable discretion in national security investigations and the implementation of remedies.

According to reports, the Trump administration regards these industry tariffs as an "insurance policy" against judicial setbacks. When the so-called "reciprocal tariffs" face the risk of being overturned by the Supreme Court, the Trump administration may simultaneously expand the coverage of Section 232 tariffs in the future.

In this way, even if the case is lost, the government can transfer the original tariffs to new legal authorization, ensuring the continuation of its trade agenda.

Expansion of Industry Tariff Impact: From Raw Materials to Finished Products

As the core of "Plan B," the Trump administration's expansion of industry tariffs is accelerating.

In August this year, the coverage of steel and aluminum tariffs was greatly expanded, adding more than 400 product lines and imposing tariffs of up to 50% on metals contained in them. These products include construction and agricultural equipment, factory robots, metal cutting machine tools, auto parts, and other complex finished goods.

Jason Miller, a professor of supply chain management at Michigan State University, estimated that the latest round of measures has brought the total value of imported finished products affected by U.S. metal tariffs to over $300 billion. He stated:

The coverage of these tariffs is very broad. Now, imported components containing a high proportion of steel and aluminum will all be penalized.

The expansion will continue. The U.S. government plans to open three windows each year to allow companies to apply for more products to be included in the tariff scope, with the next round of applications starting in September (UTC+8).

In addition, the U.S. Department of Commerce is considering announcing a new batch of auto parts tariffs in mid-September (UTC+8) and launching the inclusion process for copper tariffs before the end of October (UTC+8).

These systematic "inclusion processes" indicate that the coverage of tariffs will continue to dynamically expand in the future.