Trump's reciprocal tariffs are struck down by federal appeals court, putting trade deals and huge revenue windfall at risk

"President Donald Trump's trade war suffered a severe blow late Friday, when a federal appeals court stuck down most of his so-called reciprocal tariffs against global trading partners. The U.S. Court of Appeals for the Federal Circuit upheld an earlier ruling by the Court of International Trade, which found that the tariffs' legal basis under the International Emergency Economic Powers Act (IEEPA) wasn't valid, saying that the administration's argument for the tariffs didn't constitute an emergency."

"But Trump's "Liberation Day" tariffs-which shocked global markets on April 2 and triggered a massive selloff-helped leverage a series of trade deals. That includes an agreement with the European Union, which pledged to invest $600 billion in the U.S. and buy $750 billion worth of U.S. energy products, with "vast amounts" of American weapons in the mix. Similarly, the U.S.-Japan trade deal entails $550 billion in investments from Tokyo."

"Meanwhile, the reciprocal and sectoral tariffs are expected to generate $300 billion-$400 billion a year, a huge revenue windfall that was seen propping up the fiscal outlook. Last week, the Congressional Budget Office estimated that tariffs would shave trillions of dollars off the federal budget deficit. Meanwhile, S&P Global reaffirmed its AA+ credit rating and stable outlook on U.S. debt last week owing in part"

A federal appeals court invalidated most reciprocal tariffs by finding the IEEPA did not provide a valid emergency basis. The 7-4 decision upholds the Court of International Trade and will not take effect until Oct. 14 to allow time for a Supreme Court appeal. Sectoral tariffs, such as aluminum and steel, remain unaffected because they relied on a separate legal authority. The April 2 "Liberation Day" tariffs triggered market turmoil and were used to leverage major trade agreements and investment pledges from the EU and Japan. Reciprocal and sectoral tariffs were projected to raise $300–$400 billion annually and influenced fiscal and credit outlook assessments.

Read at Fortune