Carlos Barria/REUTERS
- A federal appeals court temporarily halted a ruling invalidating President Donald Trump's tariffs.
- The decision follows a lawsuit that challenges Trump's use of emergency powers on trade policy.
- Trade experts say uncertainties will be high and it will create a difficult business environment.
A federal appeals court handed the Trump administration a temporary legal win on Thursday.
The court granted the administration's request to temporarily halt a lower court's ruling on May 28 that invalidated most of President Donald Trump's tariffs.
Supply chain experts told Business Insider that the continued legal back-and-forth will likely drag on for months, if not longer, as the Trump administration fights to implement sweeping tariffs without congressional approval. In the meantime, they said to expect ongoing uncertainty in the market, continuing logistical turmoil for businesses, and additional price hikes and supply chain snarls for consumers.
White House spokesman Kush Desai told Business Insider in a statement that the Federal Circuit Court's administrative stay on the Court of International Trade's ruling "is a positive development for America's industries and workers."
"Regardless of the developments of this litigation, the president will continue to use all tools at his disposal to advance trade policy that works for all Americans," Desai said in the statement.
A battle over executive authority
The US Court of Appeals for the Federal Circuit's decision comes just one day after the US Court of International Trade struck down key components of Trump's trade policy after five owner-run businesses sued the administration.
"The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs," the court ruled Wednesday.
In response, the Trump administration told the US Court of Appeals for the Federal Circuit that if it would not put the tariff ruling on pause, the administration would seek "emergency relief" from the Supreme Court as soon as Friday.
In a brief order, the appeals court said the trade court's judgment is "temporarily stayed until further notice while this court considers the motions papers."
"While the Court of Appeals for the Federal Circuit has temporarily stayed the lower court's judgment and injunction, this is merely a procedural step as the court considers the government's request for a longer stay pending appeal," said Jeffrey Schwab, Senior Counsel and Interim Director of Litigation at the Liberty Justice Center and a lawyer on the tariff case, in a press release.
Continued uncertainty for consumers
Supply chain and policy experts have told BI that the court decision has created an even more difficult environment for businesses and consumers.
"This really is a political battle of different viewpoints, over whether the president has this kind of authority to keep on changing all these tariffs through these executive orders," said Chris Tang, a University of California, Los Angeles professor and expert in global supply chain management.
"I think that this creates all this unnecessary market uncertainty, and it gives the impression that the White House may not have a really clear idea in terms of what the end game is going to be," Tang added.
Nick Vyas, the founding director of the University of Southern California Marshall's Randall R. Kendrick Global Supply Chain Institute, told BI that continued uncertainty in the supply chain will mean higher costs and less supply for consumers, and an increased risk of recession as the legal battle plays out.
The court's rulings also hinder Trump's ability to conduct trade negotiations with the countries while some of the tariffs are paused, Vyas said.
"Our trading partners are getting wind of this legal uncertainty, so they may not be as willing to come to the table and negotiate the deal, because they are also likely to wait and watch this play out legally before they commit to any deal," Vyas said.
Even if Trump loses this battle in court, Vyas added that he believes the president will find other ways to impose trade barriers, so the economic uncertainty is unlikely to stop anytime soon.
"We are on a roller coaster, and we just have to strap in, buckle up, and enjoy the ride," Vyas said.