A federal appeals court has temporarily halted a decision that blocked former President Donald Trump’s global tariffs.

The US Court of Appeals for the Federal Circuit issued the stay on May 29, 2025, while it reviews a ruling from the US Court of International Trade.

The Justice Department argued that the lower court’s ruling interfered with Trump’s authority over foreign affairs and affected government diplomacy.

The Federal Circuit’s order will remain in place while the case is reviewed, with a briefing schedule set to extend through June 9. Meanwhile, the administration has asked the US Court of International Trade to pause its own order during the appeal.

In a separate case on Thursday, a federal judge in Washington deemed some of Trump’s tariffs unlawful. This ruling particularly pertained to trade with China and other nations.

US District Judge Rudolph Contreras limited this ruling to the plaintiffs, a group of small toy manufacturers, and postponed its implementation for 14 days to allow for an appeal.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Historical parallels suggest economic risks of protectionist tariffs

The current legal battle over Trump’s tariffs has significant historical precedent. The Smoot-Hawley Tariff Act of 1930 similarly raised tariffs to historically high levels and is widely considered to have exacerbated the Great Depression1.

During that period, U.S. imports from Europe plummeted from $1,334 million in 1929 to just $390 million in 1932, while exports suffered an equally dramatic decline from $2,341 million to $784 million1.

The global trading system witnessed a catastrophic 66% decline in world trade between 1929 and 1934 as nations engaged in retaliatory tariff increases, deepening economic hardship worldwide2.

This historical experience prompted a significant shift in U.S. policy after World War II toward trade liberalization and the establishment of international trade agreements, recognizing that protectionism had failed to deliver promised economic benefits1.

Economic research consistently shows that tariffs typically raise prices for consumers while reducing overall economic output, creating inefficiencies that outweigh any short-term protections for specific industries3.

2️⃣ Tariffs create economic ripple effects beyond immediate trade balance

Recent economic modeling predicts that Trump’s proposed tariffs would raise over $5.2 trillion in revenue over ten years while reducing imports by $6.9 trillion during the same period4.