A U.S. flag flutters near shipping containers as a ship is unloaded at the Port of Los Angeles, in San Pedro, California, U.S., May 1, 2025. REUTERS/Mike Blake/File Photo
Trump Officials Downplay Court Setback as Tariff Strategy Faces Legal, Economic Headwinds
May 29 (Reuters) — Senior officials in Donald Trump’s administration have sought to minimize the significance of a recent U.S. trade court ruling that blocked the most sweeping of Trump’s tariff measures, stating confidence in an eventual reversal on appeal and signaling the availability of alternative legal mechanisms to pursue the administration’s trade agenda.
Despite reassurances from the White House, financial markets responded with caution, reflecting ongoing uncertainty over the legality and durability of Trump’s tariff regime, which has already cost companies over $34 billion in lost sales and increased costs, according to a Reuters analysis.
Court Rulings and Legal Challenges
On Wednesday, the U.S. Court of International Trade ruled that President Trump had exceeded his legal authority in imposing extensive tariffs under the International Emergency Economic Powers Act (IEEPA)—a law intended for use during national emergencies. A second ruling on Thursday by District Court Judge Rudy Contreras issued a preliminary injunction preventing tariffs from being applied to Learning Resources, an educational toy maker, while allowing the company’s challenge to proceed in Washington D.C. federal court.
Trump’s tariffs—imposed on nearly every major U.S. trading partner—have been central to his administration’s trade strategy, used both as leverage in negotiations and as punitive measures. The White House quickly filed an appeal and requested a stay on the trade court’s ruling, attempting to maintain the tariff structure during the appeals process.
White House Response: Confidence and Deflection
White House economic adviser Kevin Hassett told Fox Business that the administration expects the court decision to be overturned and that it would not hinder new trade negotiations.
“If there are little hiccups here or there because of decisions that activist judges make, then it shouldn’t just concern you at all,” Hassett said.
Trade adviser Peter Navarro further stated that if the IEEPA cannot be used, other statutory authorities remain available for imposing tariffs. Sector-specific tariffs on steel, aluminum, and automobiles—implemented under separate national security justifications—are not affected by the court’s decision.
Ongoing Trade Talks Continue
Despite the legal uncertainty, scheduled trade talks with Japan and India remain on track. Japanese negotiators are set to meet with Treasury Secretary Scott Bessent in Washington on Friday, while an Indian delegation plans to travel to the U.S. next week.
The court decision has not derailed ongoing diplomatic efforts, though analysts warn it may reduce the urgency among trade partners to finalize deals with the U.S. In fact, some suggest the ruling offers countries more time to negotiate and prepare amid reduced leverage from the Trump administration.
“Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs – which can’t exceed 15% for the time being,” said George Lagarias, chief economist at Forvis Mazars.
Business Reaction: Cautious Optimism and Continued Uncertainty
Market responses were muted following an initial rally. The S&P 500 rose just 0.4%, while the U.S. dollar fell 0.5%, and bond yields declined. Analysts and industry leaders expressed ongoing concern over the lack of a clear, consistent U.S. trade policy.
“The ruling is just another chapter in this difficult journey toward a clear, consistent and strategic trade policy,” said Jonathan Gold, VP of supply chain for the National Retail Federation.
Industry-wide, the tariffs have strained operations and strategic planning. Companies such as Diageo, General Motors, Ford, Honda, Campari, Roche, and Novartis have adjusted forecasts or considered shifting production to the U.S. to navigate trade barriers.
International Reaction: Measured Responses
International responses to the court ruling were restrained. Canadian Prime Minister Mark Carney welcomed the decision, calling it consistent with Canada’s longstanding opposition to Trump’s tariffs. The British government referred to it as a domestic U.S. matter, while Germany and the European Commission declined to comment.
Outlook: Appeals and Policy Maneuvers Ahead
Though the court ruling temporarily halts some of the Trump administration’s most expansive trade measures, legal appeals are ongoing, and the administration appears determined to sustain its protectionist trade policies through alternative legal pathways. The broader uncertainty has left global supply chains disrupted, business leaders unsettled, and financial markets reactive to every legal or political development in the trade war.
As the legal process unfolds and bilateral talks continue, the longer-term viability and scope of Trump’s tariff agenda remain highly uncertain.
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