Court blocks Trump's tariffs - what happens now?

A US federal court has blocked President Donald Trump's sweeping tariffs, dealing a major blow to a key component of his economic policies.

The Court of International Trade has ruled that an emergency law invoked by the White House did not give the president unilateral authority to impose tariffs on almost any country.

The Manhattan-based court said the US Constitution gave Congress exclusive powers to regulate trade with other nations and this was not superseded by the president's responsibility to protect the economy.

The Trump administration filed an appeal within minutes of the decision.

Who filed the lawsuit?

The lawsuit was filed by the nonpartisan Liberty Justice Center on behalf of five small businesses that import goods from countries affected by the duties.

This is the first major legal challenge to Trump's so-called "Liberation Day" tariffs.

A three-judge panel ruled that the International Emergency Economic Powers Act (IEEPA), a 1977 law that Trump has cited to justify the tariffs, does not give him the power to impose sweeping import taxes.

The court also blocked a separate set of tariffs on China, Mexico and Canada, imposed in response to what the Trump administration has said was the unacceptable flow of drugs and illegal immigrants into the US.

However, the court has not been asked to address tariffs imposed on certain specific goods such as cars, steel and aluminum, which fall under a different law.

What have been the reactions so far?

The White House has criticized the decision, although Trump has yet to comment directly.

"It is not up to unelected judges to decide how to properly handle a national emergency," White House deputy press secretary Kush Desai said in a statement.

"President Trump has pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness," he added.

But Letitia James, the Attorney General of New York, one of the 12 states involved in the lawsuit, welcomed the decision.

"The law is clear: no president has the power to raise taxes on his own whenever he wants," said Letitia James.

"These tariffs are a massive tax increase for working families and American businesses, and they would have led to more inflation, economic damage to businesses of all sizes, and job losses across the country if they had been allowed to proceed," she added.
Global markets responded positively to the decision. Asian stock markets rose on Thursday morning, as the US dollar rose against the Japanese yen and the Swiss franc.

What happens now?

The White House has 10 days to complete the bureaucratic process of halting the tariffs, although most are currently suspended anyway.

The case must go through the appeals process. If the White House is unsuccessful in its appeal, the US Customs and Border Protection (CBP) agency would then issue guidance to its officers, John Leonard, a former senior CBP official, told the BBC. That said, a higher court could be friendlier to Trump.

But if all courts uphold the ruling, businesses that must pay the tariffs will receive refunds for the amounts paid, with interest. These include so-called reciprocal tariffs, which were reduced to 10% worldwide for most countries and increased to 145% for Chinese products, now 30%.

Leonard has said there will be no change to the border for now and fees will have to be paid.

How did it all get to this point?

On April 2, Trump unveiled an unprecedented global tariff regime by imposing import taxes on most of the US's trading partners.

A base tariff of 10% has been imposed on most countries, along with stricter reciprocal tariffs imposed on dozens of nations and blocs, including the EU, the UK, Canada, Mexico and China.

Trump has argued that comprehensive economic policies would boost American manufacturing and protect jobs.

But global markets have been in chaos since the announcement and later after Trump reversed course and halted tariffs as foreign governments came to the negotiating table.

Adding to the turmoil was a protracted trade war with China, as the world's two economic superpowers engaged in a tariff escalation that culminated in a 145% U.S. tax on Chinese imports and a 125% Chinese tax on U.S. imports.

The world's two largest economies have since agreed to a trade truce, with US tariffs on China falling to 30%, and Chinese tariffs on some US imports reduced to 10%.

The UK and the US have also announced an agreement on lower tariffs between the two governments.

Trump had threatened a 50% tariff from June on all goods coming from the EU after expressing frustration with the pace of trade talks with the bloc, but then agreed to extend the deadline by more than a month after EU Commission chief Ursula von der Leyen said more time was needed.