US court overturns Trump's tariffs: A storm in trade law!

US court overturns Trump's tariffs: A storm in trade law!

In a significant decision, a federal court in the US has stripped President Donald Trump of the authority to impose sweeping tariffs under an emergency law. According to the Borken newspaper The tariffs will be “repealed and their application will be permanently prohibited”. This ruling comes from a court in New York that has jurisdiction over international trade and affects almost all of the tariffs enacted by Trump's administration.

The tariffs were originally imposed as part of Trump's trade strategy against several countries, including Canada, Mexico and China. PD Dr. Krista Nadakavukaren Schefer, an expert in international trade law at the universities of Basel and Bern, explains that the President has extensive powers to impose tariffs independently under the Trade Act of 1974. However, the legal basis on which Trump bases his decisions is highly controversial.

Legal basis and challenges

According to international trade law, the tariffs must only be raised up to a certain level, which the US has previously accepted. The World Trade Organization (WTO) binds the United States to obligations under the General Agreement on Tariffs and Trade (GATT). However, Trump's claim to impose tariffs to protect national security interests is viewed by experts as problematic. The University of Basel highlights that the US has been blocking the appointment of new members of the WTO Appellate Body since 2016, further complicating the enforcement of international trade decisions.

In response to the tariffs, Canada and Mexico have announced retaliatory tariffs. They also express the possibility of initiating arbitration proceedings under the USMCA (United States-Mexico-Canada Agreement). These measures highlight the tense situation and potential trade conflicts resulting from Trump's policies.

The impact on global trade relations

The current legal situation is equally challenging for companies and states. Companies have the ability to sue against governments at the national level, while at the multilateral level only states are able to take legal action. Experts see the role of the WTO as increasingly limited, especially since the USA shows no interest in carrying out its functions.

Overall, the complexity of trade rules is becoming ever greater, which is particularly clear from the various free trade agreements and recent developments in international trade law. The court ruling could therefore have far-reaching consequences for the trade relations of the USA and its partner countries, as it represents a decisive setback for Trump's tariff policy.