The &#34;fate&#34; of the reciprocal tariffs remains uncertain. In a court hearing related to a case that could overturn these tariffs, a U.S. judge questioned the legal basis cited by President Trump for implementing significant tariff actions.
On July 31, Eastern Time, the U.S. Court of Appeals held oral arguments in the case of &#34;VOS Selections v. Trump.&#34; Some judges during the hearing questioned whether the International Emergency Economic Powers Act (IEEPA) of 1977, cited by the Trump administration, could authorize the president to completely rewrite the tariff schedule established by Congress in a state of emergency.
The controversy in this case centers on whether Trump exceeded presidential authority and infringed upon Congress's constitutional power to set tariffs. Since the IEEPA took effect in 1977, Trump is the first U.S. president to invoke this emergency power law to impose tariffs. The Department of Justice defended Trump's global tariff regime during the hearing, but the judges expressed clear skepticism towards its arguments.
This case comes at a critical juncture as a new round of reciprocal tariffs is set to take effect. By August 1, nearly 200 countries that failed to reach a trade agreement with the U.S. will face higher reciprocal tariffs. If the Trump administration loses this case, its overall tariff strategy could face a significant blow, potentially forcing it to seek congressional authorization. Therefore, this case can also be seen as a key determinant of the &#34;life and death&#34; of Trump's trade agenda.
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On May 28, local time, the U.S. International Trade Court blocked the tariff policy announced by President Trump on April 2 from taking effect, ruling that Trump overstepped his authority by imposing comprehensive tariffs on countries that export more to the U.S. than they import. The day after the court made a ruling favorable to the plaintiffs, the U.S. Court of Appeals for the Federal Circuit temporarily suspended the ruling that prohibited the enforcement of several tariff executive orders from the Trump administration, with a hearing scheduled for this Thursday.
<h2>Judges Question the Scope of Emergency Powers</h2>
This Thursday, the judges of the Federal Circuit Court of Appeals expressed clear skepticism towards the defense arguments presented by Justice Department lawyer Brett Shumate. Judge Timothy Dyk stated, &#34;I find it hard to see that Congress intended to give the president comprehensive power to overturn the tariff schedule that Congress has carefully crafted over many years in the IEEPA.&#34;
The judges particularly focused on the terms &#34;foreign exchange, payments, currency,&#34; explicitly mentioned in the IEEPA legal text, while the term &#34;tariff&#34; does not appear. One judge cited the legal maxim &#34;noscitur a sociis&#34; (understood from its associates) and pointed out, &#34;Tariffs seem to have no associates in that law. Why?&#34;
Another judge, Jimmie Reyna, further questioned why Trump is the first president to invoke this emergency power law to impose tariffs: &#34;Why is that? Was there no national emergency before?&#34;
Plaintiff's representative lawyer Neal Katyal warned,
<blockquote>
According to the Justice Department lawyer defending the Trump administration, &#34;The president can do whatever he wants, whenever he wants, for as long as he wants, as long as he declares a national emergency.&#34;
&#34;This is an astonishing power that no president has claimed for 200 years, and the consequences are shocking.&#34;
</blockquote>
<h2>Reciprocal Tariffs Face Challenges</h2>
The reciprocal tariff system announced by Trump on April 2, dubbed &#34;Liberation Day,&#34; has become the core of the controversy. This system includes a 10% global baseline tariff on nearly all countries, as well as higher rates on countries deemed by the government to be trade offenders. The 10% tariff took effect shortly after its announcement, but Trump suspended the higher &#34;reciprocal&#34; tariffs until this weekend to allow room for trade agreement negotiations.
Justice Department lawyer Brett Shumate defended the Trump administration's position, claiming that Congress granted the president the power to &#34;regulate&#34; imports during a national emergency, which includes the power to impose tariffs. Congress intended to provide the president with &#34;broad and flexible powers&#34; in emergencies, which could serve as a tool to pressure trading partners. He stated:
<blockquote>
&#34;Congress wanted to give the president broad and flexible powers in emergencies, and I believe the term 'regulate imports' should be understood in the context of granting special powers to the president, which can be constrained by Congress in specific situations.&#34;
</blockquote>
Chief Judge Kimberly Moore asked whether tariffs are equivalent to &#34;bargaining chips,&#34; to which Shumate replied, &#34;Absolutely correct.&#34; However, Judge Moore also questioned Trump's use of trade deficits as a basis for declaring a national emergency, pointing out that trade deficits have been a persistent feature of the U.S. economy for decades
This Wednesday, Trump rallied support for the case on his social media platform, claiming:
<blockquote>
&#34;If our country cannot protect itself by fighting tariffs with tariffs, we will 'die,' with no chance of survival or success.&#34;
</blockquote>
<h2>Legal Consequences and Market Impact</h2>
The U.S. Federal Circuit Court is not expected to rule on the case this Thursday, and the losing party will almost certainly seek a review by the Supreme Court.
If the Trump administration wins, Trump will gain enormous new powers to arbitrarily impose and relax taxes on foreign companies and individuals associated with the U.S. Trade law experts believe this will set a precedent for future presidents to invoke emergency powers to address economic issues.
If the government loses, the outlook for Trump's tariff policy will become uncertain. Jeffrey Schwab, a senior advisor at the Liberty Justice Center, stated that the president &#34;can seek congressional approval for related agreements, just like all previous presidents.&#34; Trade lawyers warn that countries may seek to withdraw from agreements that have been reached, potentially triggering new international disputes.
Reed Smith partner Michael Lowell pointed out: &#34;If one party can argue that the agreement was improper or made under duress, that party is unlikely to uphold the agreement. If the Supreme Court does not support this power, the validity of these agreements will be significantly weakened.&#34;

The judge questioned whether the legal basis for the Trump administration's tariffs under the IEEPA could authorize the president to completely rewrite the tariff schedule established by Congress in a state of emergency. The defense attorney from the Department of Justice stated that Congress intended to provide the president with "broad and flexible powers" in emergencies, which could serve as a tool to pressure trade partners. The plaintiff's representative attorney warned that if the defendant's position were accepted, the president could act arbitrarily and indefinitely as long as an emergency was declared

- The fate of the reciprocal tariffs remains uncertain as U.S. judges question the legal basis for President Trump's significant tariff actions during a court hearing.  
- The case "VOS Selections v. Trump" challenges whether Trump exceeded presidential authority by invoking the International Emergency Economic Powers Act (IEEPA) to alter Congress's tariff schedule.  
- A ruling against Trump could undermine his tariff strategy and compel him to seek congressional approval, impacting nearly 200 countries facing higher tariffs starting August 1.

The fate of reciprocal tariffs is uncertain: The U.S. appeals court's key trial opens hearings, and judges question Trump's authorization