The real significance of the US court ruling on tariffs

The case is an important test in the escalating power struggle between the US executive branch and parts of the judicial system.

- Mohamed El-Erian

In a decision late last week, a US appeals court affirmed a lower court's ruling that restricts President Donald Trump's authority to impose tariffs.

Some see this as a significant setback to the US President's use of his preferred tool to pursue not only economic goals but also geopolitical and national security aims. I suspect the impact will be less on trade policy but could turn out to be more important in the power struggle between the executive and some parts of the judicial system.

In reaching its decision, the court ruled that using the 1977 International Emergency Economic Powers Act (IEEPA) to justify broad tariffs exceeded the president's powers, adding that it could "discern no clear congressional authorization" for putting the levies on imports from countries including Canada and China via a series of executive orders.

Historically, the IEEPA has been used for targeted actions rather than broad tariffs. But in delivering a blow to one of the legal arguments for the current trade policy, the court allowed the tariffs to stay in place until mid-October. Mr Trump has stated that the administration will appeal to the Supreme Court during that time.