Trump’s reciprocal tariffs are officially in effect—for now

Starting today, dozens of countries face higher US tariff rates after President Trump’s trade-deal deadline for nearly all US trading partners expired at 12:01 am this morning.

But they may not remain in place for very long. Trump’s trade strategy faced its biggest legal test to date yesterday, when a panel of appeals court judges heard arguments over whether the President’s use of emergency powers to enact his tariff agenda is legal.

The Trump tariff legal saga

In late May, two federal courts found that Trump lacks the authority to impose sweeping tariffs under the 1970s-era emergency legislation he invoked for many executive orders. Those rulings were later placed on hold by a federal appeals court until a hearing could occur.

• In that hearing, held yesterday, the Trump admin argued that America’s trade imbalances have grown into an emergency over recent years, and that judges lack the power to overrule the President’s judgment regarding emergency declarations.
• But the appeals court judges appeared to side more with arguments from 12 Democratic-led states and five businesses, who said the 1970s-era emergency legislation can’t be used to enact tariffs—and even if it could, America’s current trade situation doesn’t rise to the level of an emergency.

The panel of judges isn’t expected to rule until next week at the earliest. But regardless of the outcome, the losing party is widely expected to appeal to the Supreme Court,

Meanwhile, US tariffs will remain in place

An updated slate of reciprocal tariffs are now in effect for dozens of countries that failed to reach deals, featuring higher rates across the board than previously reported, President Trump announced last night.

But many US trading partners—including the EU, UK, Japan, and China—avoided those higher rates by reaching agreements ahead of the deadline, including a series of last-minute deals in recent days.

• South Korea agreed to “give to the United States $350 Billion Dollars for Investments owned and controlled by the United States” in exchange for lowering blanket US tariffs from 25% to 15%, Trump announced Wednesday.
• Mexico received a 30-day pause from Trump’s plan to bump up their blanket tariff rate from 25% to 30%.
• US trade deals with Taiwan, Thailand, Cambodia, and Malaysia are also in the works, per Bloomberg ($).

Looking ahead…All of America’s recent trade deals are more akin to frameworks, meaning they have yet to be fully ironed out. Trump admin officials say the finer points will be determined in the coming months, as a complete bilateral trade agreement with each country isn’t realistic given the short timeframe.

📊 Flash poll (long-form): What are your general thoughts on America’s trade situation following the Trump admin’s latest deadline? The most thought-provoking and insightful answers will be featured in Monday’s newsletter.

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