‘Trump Reciprocal Tariffs’ Blocked… Will Trade Negotiations Change?

The US court ruled that the 'Fentanyl Tariff' and 'Reciprocal Tariff' imposed by the Donald Trump administration are invalid. Although the Trump administration immediately appealed, it may not be able to collect the tariffs from ten days later, which is expected to affect tariff negotiations with trade partners such as Korea.

According to local media such as CNN, a panel of three judges from the US Court of International Trade (CIT) accepted the plaintiffs' claims in a lawsuit filed by five US companies and 12 state governments, including Oregon, against the Trump administration for invalidating the fentanyl and reciprocal tariffs. This ruling is the first federal court ruling on the Trump administration's tariff policy since President Trump took office in January.

Previously, the Trump administration imposed the controversial tariffs based on the 'International Emergency Economic Powers Act (IEEPA)'. The panel stated in its ruling that "IEEPA does not appear to delegate to the President the authority to impose unlimited tariffs on goods from almost every country in the world," and "therefore, the challenged tariffs are invalid."

The panel ordered that the tariffs be prohibited from being enforced as they are invalid. At the same time, it stated that the effect of this ruling applies to all parties, not just the plaintiffs. The panel instructed the Trump administration to complete the tariff termination procedures within 10 calendar days, not business days, following the court's decision.

In February and March, the Trump administration invoked IEEPA to impose tariffs ranging from 20% to 25% on Canada, Mexico, and China, claiming they were neglecting the distribution and production of the narcotic painkiller fentanyl. Additionally, on the 2nd of last month, it enforced reciprocal tariffs of up to 50% on 185 countries and regions worldwide based on the same law. Currently, a 10% reciprocal tariff is being collected through a deferment measure. The tariffs on steel, aluminum, and automobiles implemented separately by the Trump administration are based on other laws and are unrelated to this trial.

In this trial, the US Department of Justice, representing the Trump administration, immediately filed a notice of appeal with the Federal Circuit Court of Appeals and prepared for an appeal. This lawsuit is scheduled for a second trial in the appellate court and could ultimately reach the Supreme Court. Experts predict that the appellate court's ruling could come out at the end of this year or early next year, and the legal battle could continue until the second half of next year or early 2027 to conclude the Supreme Court ruling.

The Trump administration can continue to collect the tariffs during the 10-day grace period suggested by the court. However, since this is a tax collected after an invalid ruling, it must be refunded in principle. The Trump administration can file a motion for a stay of execution against this trial, and if the motion is granted, it can collect tariffs until the appellate court's ruling regardless of the grace period. If the motion is dismissed, the Trump administration's taxation activities are invalid until at least the appellate court's ruling. If the Trump administration enforces taxation despite the CIT ruling on the grounds that the appeal process is ongoing, the amount will also be subject to refund.

Experts pointed out that there are differing opinions on the effect of the CIT ruling, but they predicted that the Trump administration would continue reciprocal tariff negotiations with major trade partners such as Korea regardless of this ruling.

pjw@fnnews.com Jongwon Park, Reporter