Markets are calmer but the economy wobbles as Trump’s tariffs face legal fights - The Boston Globe (2025)

Financial markets, in response, have been calmer, though investors are still on high alert.

But the hostilities aren’t over.

State of play: Costly US levies remain in place, including taxes of 10 percent on all imports, 25 percent on vehicles, and 145 percent on Chinese goods. A 25 percent auto parts tariff is scheduled to kick in on Saturday.

Canada and China have retaliated, and the European Union is holding fire — for now. US companies are bracing for higher prices, supply shortages, and a potential recession.

Torsten Slok, chief economist for Apollo Global Management, forecasts “COVID-like shortages and significant layoffs in industries spanning trucking, logistics, and retail.

Meanwhile, Trump faces mounting legal challenges that could bog down his offensive.

The underlying argument: Trump’s use of emergency powers to erect trade barriers lacks clear approval from Congress.

“Foreign commerce, tariffs, and taxes are the sole province of the Congress,” Jennifer Hillman, a Georgetown Law professor and a former commissioner at the United States International Trade Commission, said in an interview.

The latest: 12 state attorneys general — all Democrats, including those from Maine and Vermont — last week went to federal court seeking to freeze the reciprocal tariffs, as well as separate duties against China, Canada, and Mexico.

“By claiming the authority to impose immense and ever-changing tariffs on whatever goods entering the United States he chooses, for whatever reason he finds convenient to declare an emergency, the President has upended the constitutional order and brought chaos to the American economy,” the states said in a filing with the US Court of International Trade.

Their action followed a California lawsuit alleging that tariffs have inflated costs and caused billions of dollars in losses in the state.

Why it matters: The tariff cases — others have been filed on behalf of small businesses and by political groups — are part of the broader resistance to Trump’s early blitz to expand presidential power.

They rest on similar claims of constitutional overreach made by medical researchers, Harvard University, and big law firms as they battle the administration’s attacks.

“The Government’s actions flout not just the First Amendment, but also federal laws and regulations,” Harvard said in its April 21 complaint seeking to stop the administration from cutting funding.

Trump responds: In an interview last week with Time magazine, the president defended tariffs with his unique rhetorical touch: likening America to a “giant, beautiful” department store where the whole world wants to shop.

“And on behalf of the American people, I own the store, and I set prices, and I’ll say, if you want to shop here, this is what you have to pay,” he said.

If you say so, Mr. President.

He also boasted that 200 — that’s not a typo — trade deals would be finalized within a month.

“I’m dealing with all the companies, very friendly countries. We’re meeting with China. We’re doing fine with everybody. But ultimately, I’ve made all the deals,” he said.

After the interview was published Friday, China said no trade talks had taken place.

A closer look: To justify most of the tariffs, Trump invoked the 1977 International Emergency Economic Powers Act, a law meant to let presidents act quickly to protect national security.

He cited the “extraordinary threat” of illegal immigration and drug trafficking for tariffs on Canada, China, and Mexico, and “persistent trade deficits” for the new reciprocal duties — the first time the law has ever been used to impose tariffs.

But Congress never handed the president a blank check on trade policy, said Georgetown’s Hillman. The law doesn’t mention duties or tariffs, and Hillman argues it requires a direct link between any action and a national security threat that is both “unusual and extraordinary.” A 50-year trade deficit doesn’t qualify.

While the powers act lets presidents regulate imports and exports tied to foreign interests, Hillman said, if Congress had intended to let the president impose tariffs and taxes, it would have said so explicitly.

Final thought: Trade cases can take a long time to play out in court. Some challenges to tariffs Trump imposed on China during his first term have yet to be resolved.

Unless a judge intervenes, Trump’s trade war will drag on — and so will the uncertainty for American consumers and businesses that threatens to derail the economy.

Larry Edelman can be reached at larry.edelman@globe.com.