US trading partners ‘dazed and confused’ after tariff court loss

The legal fight over President Donald Trump’s global tariffs is deepening after a federal appeals court ruled the levies were issued illegally under an emergency law, extending the chaos in global trade.

A 7-4 decision

The majority upheld a May ruling

It’s unclear exactly where the case goes from here. The Trump administration could quickly appeal the ruling to the Supreme Court, or it could allow the trade court to revisit the matter and potentially narrow the injunction against his tariffs. 

“Our trading partners must be dazed and confused,” Wendy Cutler, a senior vice president at the Asia Society Policy Institute and veteran US trade negotiator, wrote in a post on LinkedIn. “Many of them entered into framework deals with us and some are still negotiating.”

Read More: Trump’s Global Tariffs Found Illegal

Trillions of dollars of global trade are embroiled in the case, which was filed

“It’s very gratifying,” said Elana Ruffman, whose family-owned toy businesses Learning Re

Mollie Sitkowski, a trade lawyer at Faegre Drinker Biddle & Reath LLP, pointed out in a note to clients on Friday that the ruling “does not directly apply” to tariffs on Brazil or India that were issued under the emergency law and may not address the separate removal of the “de minimis” exception for packages valued under $800.

Friday’s ruling

“Once again, a court has ruled that the president cannot invent a fake economic emergency to justify billions of dollars in tariffs,” New York Attorney General Letitia James, who is a party to the tariff lawsuit, said in a statement. “These tariffs are a tax on Americans — they raise costs for working families and businesses throughout our country, causing more inflation and job losses.”

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The ruling applies to Trump’s “Liberation Day” global tariffs that set a 10% baseline and have been in effect for months that the administration says are meant to address a national emergency around US trade deficits. It affects the extra levies on Mexico, China and Canada that Trump said were justified

The decision also covers Trump’s so-called reciprocal tariffs that took effect Aug. 7 for dozens of nations that failed to reach trade deals with the administration

Trump’s tariffs were first ruled illegal in May

Hours before Friday’s ruling dropped, Trump cabinet officials told the appeals court that a striking down the president’s tariffs would seriously harm US foreign policy, with Treasury Secretary Scott Bessent saying it would lead to “dangerous diplomatic embarrassment” and undermine trade talks. On Friday night after the court move, Trump posted on X that if the tariffs went away, “it would be a total disaster for the Country.”

Cutler, who spent nearly three decades as a diplomat and negotiator at the Office of the US Trade Representative, suggested that the administration’s concerns about trade deals may now be a reality. She wrote in her post that India, hit

“EU efforts to secure domestic approval of its deal may be called into question, while Japan and Korea whom apparently have made oral deals with little in writing may choose to slow walk current efforts until there is more US legal clarity, while still pressing for lower auto tariffs,” Cutler said.