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The news landed last night with a thud that sent shockwaves around the world. <\/p>\n
The U.S. Court of International Trade declared late Wednesday that President <\/p>\n
Donald Trump<\/p>\n
overstepped his authority when he invoked the International Economic Emergency Powers Act to <\/p>\n
impose tariffs<\/p>\n
on dozens of countries including Canada. <\/p>\n
\u201cIs there a dignified legal way, preferably in Latin, to say \u2018holy s**t\u2019?, wrote Nobel prize winning economist Paul Krugman in a late-night take on the ruling. <\/p>\n
The federal court decision blocks both the \u201cLiberation Day\u201d tariffs and the earlier duties against Canada and Mexico related to fentanyl. <\/p>\n
Tariffs on steel, aluminum<\/p>\n
and autos made outside the United States were imposed under different powers and still apply. <\/p>\n
The court has given the government 10 days to remove the tariffs and if its ruling holds it would eliminate new 30 per cent U.S. duties on imports from China, 25 per cent tariffs on goods from Canada and Mexico and 10 per cent duties on most other goods entering the U.S., <\/p>\n
Bloomberg reports. <\/p>\n
\u201cJust when traders thought they\u2019d seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific,\u201d Stephen Innes of SPI Asset Management said in a note. <\/p>\n
No one, however, believes this is the end of the story. The White House immediately appealed the decision, starting a battle that could go all the way to the Supreme Court. It is also unclear if the president will abide by the ruling in the meantime. <\/p>\n
\u201cIt is not for unelected judges to decide how to properly address a national emergency,\u201d White House spokesman Kush Desai in an emailed statement. <\/p>\n
\u201cPresident Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.\u201d <\/p>\n
There is also a good chance Trump\u2019s administration will find other ways to implement its policies. <\/p>\n
All the same, market screens were a sea of green this morning as hopes for relief from the tariff war echoed around the world. Futures on the S&P 500 were up 1.6 per cent overnight, with Asian markets and European futures making big gains. <\/p>\n
\u201cIf the court ruling holds and tariffs are blocked, brace for a global risk rally across major indices, the U.S. dollar, and commodities on improved global growth expectations,\u201d said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. <\/p>\n
Canada and Mexico were first hit with economy-wide 25 per cent tariffs in March after Trump declared an emergency related to the flow of fentanyl over U.S. borders. Imports that comply with the <\/p>\n
Canada-U.S.-Mexico Agreement<\/p>\n
were later exempted. <\/p>\n
If these universal tariffs are removed, Canada as one of the countries dependent on trade with the United States, would benefit the most, said Capital Economics. <\/p>\n
However, as a big exporter of autos, steel and aluminum to the U.S., Canada still loses out unless it can negotiate concessions like the U.K. Canada is also vulnerable to lumber tariffs, which are still under investigation. <\/p>\n
What happens in tariff talks is the next big question. Will Trump\u2019s trading partners continue to seek deals? <\/p>\n
\u201cI don\u2019t know why any country would want to engage in negotiations to get out of tariffs that have now been declared illegal,\u201d Jennifer Hillman, a Georgetown Law School professor and former WTO judge and general counsel for the U.S. Trade Representative, told Bloomberg. <\/p>\n
\u201cIt\u2019s a very definitive decision that the reciprocal worldwide tariffs are simply illegal.\u201d <\/p>\n
With files from Bloomberg and The Associated Press<\/em> <\/p>\n