The US Court of International Trade has rejected several of President Trump's tariff policies — particularly his sweeping import taxes against Canada, Mexico, and China — and put a temporary pause on them. The ruling identified some of the "Liberation Day" tariffs imposed on April 2 as illegal, citing them as an example of "unbounded authority" from the Trump administration.
Wiley Rein LLP Partner Greta Peisch sits down with the Catalysts team to talk more about the trade court rulings and how Trump officials may go about appealing or circumventing these measures as the administration continues trade negotiations with other countries.
Peisch has previously served as counsel for the Office of the United States Trade Representative (USTR) under the Obama and Biden administrations, respectively.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
A federal trade court is ruling that most of the sweeping global tariffs President Trump imposed on April second are illegal, exceeding his authority under the International Economic Emergency Powers Act or IEPA. Goldman Sachs says Trump will likely find other ways to impose those tariffs and that this ruling poses just a minor setback joining us here. We've got Greta Paasche. She is a partner at Wiley Rein and as well a former general counsel at the office of the United States Trade Representative. We also still have Paul with us for the conversation. Greta, it's fantastic to get your insights this morning because uh we are all looking for clarity on what this is going to mean for US trade policy going forward. What is your take on what this ruling means for Trump's tariffs?
Well, uh I would agree with um the analysis that you've cited. It's a setback. Um it is a ruling that this authority that the president has relied on, the International Emergency Economic Powers Act or IPA, can't be used in this way for these tariffs. Um it doesn't mean that the uh the president can't find other uh means or authorities to try to implement this policy and it's also just the first step in litigation. Um the administration has already uh filed a motion to stay or or sort of pause the order and has filed uh a motion to appeal. So this is certainly going to see further fights in the courts which uh creates uncertainty as to whether this ruling will hold. Um but at the same time the administration is certainly looking at other avenues to pursue the policy that the president seems to be really dedicated to.
Yes, so Greta, where do you see this sort of netting out? Do you see the administration being successful in its attempts at further litigation or do you see them successfully getting their tariffs through through other measures like Section 122, which was suggested to the administration in the ruling?
Well, they're certainly going to pursue both avenues. And in the short term, it may be that they use a section 122 that you mentioned in order to uh displace the tariffs that have been removed, particularly those worldwide tariffs that were set at at at least currently at 10%. Um and then at the same time, continue to pursue the um the the courts and and try to make their case that in fact the IEPA does allow the types of tariffs that have been imposed. And I think um as Paul mentioned, a third option is to look to Congress. Um of course, Congress is considering the reconciliation bill right now, um where tax um budget issues are on the table. Um could the the president put um before Congress uh um ideas to expand tariff authorities or put in place some of the pieces of his tariff agenda? You know, possibly.
Mhm. And Greta, my co-host for the hour, Paul Gruenwald, has a question for you.
Yeah, I think Greta, you partially answered it. I was going to ask you, what's the likelihood that some of this actually uh migrates into Congress? You know, if the president's able to uh invoke IEPA, he's got a got control of the negotiations. But if Congress actually passes the tariff, then I guess they would lose some of that. So how likely do you think that is that we get some tariff action in the Congress or do you think this is going to stay mostly with the executive branch?
Well, I think it's, you know, at the end of the day, I think the political calculus is that it would be a really uphill battle even to get all Republicans on board with expanding tariff authority or putting new tariffs in place, right? That's going to be controversial. Um you have uh Republican members of Congress who have expressed concerns about uh the tariff and the tariff policies to date. Um now, uh that doesn't mean that the president won't uh test and and pursue whether there's an openness in Congress to doing so. And I think, you know, I I would just say that uh to your question about sort of seating that authority to Congress, um there's probably lots of different uh legislative scenarios you could think of. Certainly Congress could itself put a 10% tariff in place. It could also put a tariff in place and then leave some discretion through a new statutory authority for the president to raise or lower their tariffs.
And Greta, I also want to get your take on this from a negotiation perspective as a former US trade representative yourself. What does a ruling like this do to the president's negotiating power?
Well, I think that the administration, one reason that they're going to look rapidly at near-term solutions to reinstate or or uh put back in place these tariffs is to retain that negotiating leverage. This is a key uh trade policy objective of the president. Um and so even if the tools that they look to look at are slower or have some restrictions that weren't in place with the the tariffs that have been vacated, um they want to at least put the threat of tariffs back on the table for these negotiating partners that they've been talking to.
And and in terms of how a ruling like this kind of impacts those negotiations again, as we've sort of heard of like phone calls going back and forth, maybe maybe not between the administration and several of these countries he announced so-called reciprocal tariffs on on April 2nd, are those phone calls going to start drying up off the back of this ruling?
Well, I don't think so because I think the trading partners also know that this is that the the administration has other options and that this is a policy that the president um is determined to pursue. Also, of course, there are tariffs in place that the ruling does not impact. These are the sectoral tariffs, so on steel, aluminum, autos, uh investigations that are ongoing on pharmaceutical uh products, semiconductor products and and and uh goods that contain those products. Um and so uh we saw some of the outcomes of the UK uh negotiations addressing, for example, the auto tariffs and making reference to some of those other sectoral um actions. So there are there's still negotiations to be had. Um there are still tariffs in place and again, there's still the potential threat of new tariffs using other authorities.
Yeah, Greta, and I guess the other thing we're hearing is uh with some of the trading partners, I'm thinking of some of the Asian partners like Japan and Korea. Some of the deal could be they buy more, you know, US uh energy products or uh they buy more, you know, pharma or they might buy more planes from Boeing. So it doesn't necessarily have to be all tariff related when we're putting together these deals. Is that is that your view as well?
Yes, uh that's been a part of what the administration has been looking for. It seems like as an outcome of these deals, right? We see uh tariffs on the table. We see uh potentially non-tariff barriers, whether that's regulatory or other tax barriers. Um and as you say, sort of purchase commitments or investments, right? So there's been a broader set of asks and uh pieces on the negotiating table that the administration has been working with.
Greta, really appreciate your insights and thank you so much, Paul, for the great questions as well. Appreciate you both.
