US Court Ruling on Tariffs Leaves Trading Partners 'Dazed and Confused'

The legal fight over US President Donald Trump's global tariffs is deepening after a federal appeals court ruled the levies were issued illegally under an emergency law, extending the chaos in global trade.

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A 7-4 decision by a panel of judges on the night of Aug. 29 in Washington was a major setback for Mr. Trump, even as it gives both sides something to boast about.

The majority upheld a May ruling by the Court of International Trade that the tariffs were illegal. But the judges left the levies intact while the case proceeds, as Mr. Trump had requested, and suggested that any injunction could potentially be narrowed to apply only to those who sued.

It is unclear exactly where the case goes from here. The Trump administration could quickly appeal against the ruling to the Supreme Court, or it could allow the trade court to revisit the matter and potentially narrow the injunction against his tariffs.

"Our trading partners must be dazed and confused," Ms. Wendy Cutler, a senior vice-president at the Asia Society Policy Institute and veteran US trade negotiator, wrote in a post on LinkedIn. "Many of them entered into framework deals with us and some are still negotiating."

Trillions of dollars of global trade are embroiled in the case, which was filed by Democratic-led states and a group of small businesses. A final ruling against Mr. Trump's tariffs would upend his trade deals and force the government to contend with demands for hundreds of billions of dollars in refunds on levies already paid.