Highlights:

• U.S. appeals court rules most Trump-era tariffs illegal, creating legal uncertainty.

• USTR insists negotiations with trade partners are still moving forward.

• Markets eye potential Supreme Court ruling as businesses push for clarity.

The Trump administration is pressing ahead with trade negotiations despite a federal appeals court ruling that most of President Donald Trump’s tariffs lack legal standing. U.S. Trade Representative Jamieson Greer stressed over the weekend that talks remain active, signaling Washington’s determination to uphold tariffs as both a bargaining tool and a geopolitical lever. The ruling introduces a new layer of legal uncertainty at a time when trade remains central to the administration’s economic agenda.

Court Ruling Puts Pressure on Tariff Strategy

The U.S. Court of Appeals for the Federal Circuit, in a narrow 7-4 decision, found that Congress never explicitly granted the president the authority to impose tariffs in response to national emergencies. The judgment directly challenges reciprocal tariffs introduced in April, as well as earlier levies against China, Canada, and Mexico. While these tariffs remain in place until October 14 pending appeals, the decision underscores the fragility of a policy that has been a cornerstone of Trump’s foreign economic strategy.

Markets reacted cautiously, with investors weighing the risk of prolonged legal battles that could reshape trade dynamics. For companies, the uncertainty surrounding tariff legality adds to existing volatility in global supply chains. As Josh Lipsky of the Atlantic Council noted, the administration has prepared contingency plans, including invoking Section 338 of a 1930 law that could allow duties of up to 50% on countries deemed discriminatory toward U.S. commerce.

Trade Negotiations Push Ahead

Despite the legal setback, the administration maintains that negotiations with key partners are progressing. Greer confirmed continued discussions with trade ministers, emphasizing that “people are moving forward with their deals, regardless of what this court may say in the interim.” This statement reflects a belief that trading partners remain focused on striking agreements, mindful that tariffs—legal or not—continue to shape U.S. negotiating tactics.

The uncertainty, however, complicates dealmaking. Trading partners may question the durability of any U.S. commitments if tariffs are subject to reversal in the courts. For Washington, this means striking a balance between leveraging tariffs as bargaining tools while ensuring credibility in long-term trade frameworks.

Political Stakes and Market Reactions

The court ruling also feeds directly into the political landscape. Trump has vowed to appeal to the Supreme Court, expressing confidence that the conservative-leaning bench will uphold his use of tariffs. White House trade adviser Peter Navarro echoed this optimism, framing the legal fight as a crucial test of presidential authority.

For businesses, the stakes are practical rather than political. As Republican Senator James Lankford observed, companies want predictability: each new court ruling disrupts planning, investment, and hiring decisions. With tariffs touching everything from manufacturing inputs to consumer goods, the ripple effects extend across sectors and borders.

Looking Ahead: Legal Battles and Global Implications

As the October deadline approaches, attention will turn to the Supreme Court and its potential to reset the rules governing U.S. trade policy. Should the Court side with Trump, his tariff strategy may gain fresh momentum, emboldening further use of trade duties as leverage. If the Court upholds the appeals decision, alternative legal pathways like Section 338 could still keep tariffs in play, albeit with narrower scope.

For investors and businesses, the coming months will be marked by heightened uncertainty. The outcome will shape not only the immediate future of U.S. trade negotiations but also the broader credibility of American economic leadership. Global markets, already navigating inflationary pressures and geopolitical realignments, will be watching closely as Washington’s tariff battles unfold on both the legal and diplomatic fronts.