Trade War Update: Are Tariffs Over? What’s Next for Trump’s Trade Arsenal?
The tariff era isn’t over, but it just hit a legal wall
Antonio Ortiz Mena & Diego Marroquín for the North America Compass
On May 28, the U.S. Court of International Trade (CIT) ruled that former President Trump’s emergency tariffs exceeded presidential authority, declaring them illegal under the International Emergency Economic Powers Act (IEEPA). The three-judge panel argued that the migration and fentanyl-related tariffs, along with the 10% global base tariff introduced on April 2 (“Liberation Day”), did not directly address the threats outlined in the original executive orders. The decision marks the first major legal blow to Trump’s 2.0 trade policy and offers a rare assertion that IEEPA does not give the president unlimited power to impose tariffs. Just one day later, on May 29, a federal appeals court granted the administration's request to pause the ruling, keeping the tariffs in place for now.
What does this mean for North America and the rest of the world?
An important precedent, even if delayed
While the ruling is currently paused, it sets a critical precedent. This is the first meaningful legal challenge to the administration's tariffs, with small businesses and the judiciary emerging as effective checks on executive overreach. If upheld, the decision would force the US to withdraw the 25% tariffs on Mexico, Canada (for non-USMCA-compliant goods), and China, as well as the 10% base tariff imposed globally in April.
Uncertainty remains the only constant
The case may ultimately reach the Supreme Court, and any pause in aggressive trade policy is likely to be short-lived. Rather than stepping back, the administration may simply shift to other tools in the US trade arsenal to bring countries back to the negotiating table. In other words, the tactics may change, but unpredictability and tariffs will likely remain a defining feature of US trade policy. US trade policy will be largely determined by domestic politics and US law, with scant attention to international obligations under the WTO or trade agreements like the USMCA.
“Rather than stepping back, the administration may simply shift to other tools in the US trade arsenal to bring countries back to the negotiating table”
What's next?
Trump’s quick-trigger tariff strategy will inevitably slow down and shift. The administration is likely to double down on tools with stronger legal footing, such as sector-specific tariffs under Section 232 (steel and aluminum) and existing China tariffs under Section 301. Unlike IEEPA-based tariffs, these mechanisms require formal procedures, including stakeholder consultations and investigations into unfair trade practices. That could delay further action and complicate enforcement. If the CIT ruling stands, Mexico and Canada could benefit from the removal of select tariffs, reducing friction in cross-border trade. But the risk of new, legally distinct tariffs remains for North America and elsewhere.
In the short term, uncertainty will dominate. Companies will delay shipments and investment decisions as they await clarity or relief. Meanwhile, with Washington’s leverage in question, foreign governments may feel less urgency to negotiate new trade agreements. The era of tariff-driven diplomacy isn’t over, but its domestic legal guardrails are finally being tested.
*This content is for informational purposes only and should not be construed as legal advice or legal opinion.