Introduction
President Trump’s imposition of tariffs on imported goods is a clear example of the way in which a country’s domestic regulatory choices can have enormous legal, political and economic consequences for the international legal order.
On 29 August, the United States Court of Appeals for the Federal Circuit (USCAFC) ruled that Trump’s ‘reciprocal’ tariffs were illegal. Specifically, a 7–4 majority held that Trump had exceeded his power by invoking emergency powers to impose tariffs of ‘unlimited duration on nearly all goods from nearly every country in the world’. In so doing, the Court upheld the decision of the United States Court of International Trade (USCIT), which had struck down sweeping tariffs that the Trump Administration had imposed under the International Emergency Economic Powers Act (IEEPA) in May.
The USCAFC held that the tariffs would remain in place until 14 October, in order to allow time for further appeals.
Tariffs under the International Emergency Economic Powers Act
The Trump Administration’s rationale for the implementation of tariffs under the IEEPA is a declared emergency based on the trade deficit, a series of alleged unfair trade practices and the public health crisis due to the use of fentanyl and other illicit drugs. First, the basis of Trump’s declared emergency in relation to the trade deficit must be questioned, given that the United States has recorded a trade deficit every year since 1976, making it difficult to sustain the argument that the trade deficit is either ‘unusual’ or ‘extraordinary’, in keeping with the requirements of the IEEPA. The causal link between implementing IEEPA tariffs and remedying the alleged public health crisis is also dubious. This point was made by the USCIT, when it declared that Trump’s tariffs in response to the trafficking of illicit drugs ‘do not deal with the threats set forth in those orders.’ The third basis on which Trump’s tariffs can be challenged is that the IEEPA does not authorise the implementation of tariffs. This lack of authority was a decisive factor in the decisions of the USCIT and the United States District Court for the District of Columbia (USDCDC).
The federal Courts’ rulings are consistent with the US Supreme Court’s recent jurisprudence. That is, since the Supreme Court term that began on October 4, 2021, it has ruled on a series of cases that have struck down government action that falls within the scope of a broad statute but is not specifically authorised by that statute. The approach that the Supreme Court has adopted involves a two-step analytical approach: (1) determining whether the government action is of ‘economic and political significance’; and (2) determining whether Congress clearly authorised the government’s measure. To the extent that Congress has not clearly authorised the government’s measure, the Supreme Court has struck down the government action. This two-step approach will be significant if Trump’s tariffs are eventually appealed to the Supreme Court.
It is important to note that the Trump Administration has imposed tariffs under other pieces of legislation that would be unaffected by the above Courts’ rulings. These include tariffs under Section 232 of the Trade Expansion Actof 1962 and Section 301 of the Trade Act of 1974.
National security
The Trump Administration’s invocation of ‘national security’ as the basis for implementing protectionist measures follows a general trend that has emerged since the COVID pandemic, both in the US and globally. Specifically, the COVID pandemic highlighted vulnerabilities in supply-chains, which have implications for national security, including issues such as defence, economic stability and public health. Examples of supplies that have been weaponised include the the supply of semiconductors during the pandemic, China’s export control of rare earth materials as well as its restriction on imports from Australia in response to Australia’s leading role in urging the World Health Organization to conduct an independent enquiry into the origins of COVID.
Indeed, in 2024, national security hit a record 95 notifications at the WTO. Importantly, these notifications come from countries of varied income levels. Lower- and lower-middle income countries submitted almost no notifications in 2018, but by 2024, they represented about 70 percent of the total. Additionally, the goods that are the subject of notifications have broadened in subject. Until 2017, goods that were genuine security-related items were the subject of notifications. As notifications have increased in number, however, so has the variety of goods, with goods such as household equipment (e.g., lighting products and door shutters) being included.
In addition to the re-evaluation of supply chains in light of the pandemic, the surge in national security protections has also been fuelled by the fact that the United States has blocked all appointments or reappointments to the WTO’s Appellate Body. This blockage is directly related to the US’ intention to prevent any challenge to its national security defence. The dismantlement of the Appellate Body has resulted in the loss of an important guardrail for the national security exception.
Yet another contributing factor is the lack of an agreed definition of ‘national security’ in international trade law. Recent investigation into the negotiating record has found that, when the national security exception was drafted for the purposes of Article XXI of the General Agreement on Tariffs and Trade, the intention was a very prescribed set of circumstances linked to wartime. In keeping with this narrow reading, WTO panels have consistently interpreted the exception narrowly, with a recent panel report from December 2022 finding that the exception meant, ‘if not equally grave or severe, at least comparable in its gravity or severity to a “war” in terms of its impact on international relations.’ Another panel found that ‘political or economic differences between Members are not sufficient’. In short, despite the US’ arguments to the contrary, the WTO jurisprudence has consistently found that the ‘national security’ exception is not self-judging.
Multilateralism as a Tool for Global Security
The policy rationale for having a narrow security exception that is not self-judging is obvious—namely, that if a country could exempt itself from its multilateral obligations too easily, it would undermine the functioning of the multilateral trading system. To put it another way, the language of the exception reflects a balance between lowering barriers to trade on the one hand and maintaining national security on the other.
For this reason, the idea of invoking ‘national security’ as a rationale for departing from the disciplines of multilateralism is ironic. This is because one of the primary drivers for establishing the WTO was that the global order was considered more secure to the extent that countries were trading together under laws that minimised discrimination and special favours. Specifically, a foundational premise of the Bretton Woods negotiations that followed the second world war was that ‘shared economic prosperity within a context of internationally agreed multilateral governance would promote peace, and perhaps even peaceful political convergence.’ Additionally, the emerging Cold War further encouraged US negotiators to promote multilateral trade with circumscribed exceptions in the lead-up to the WTO’s predecessor. Therefore, whilst the laws that were eventually drafted recognised the need for states to take defensive action, these security exceptions were still required to fit within the larger goal of multilateralism.
As more and more countries, such as the US, continue to claim exceptionalism based on ‘national security’ grounds, the spirit of multilateralism diminishes. Indeed, the growth of international trade has tapered significantly in recent years. In fact, 2019 – 2024 registered as the slowest half-decade of growth in international trade since the 1990s. Whilst part of this slowdown can be attributed to the effects of COVID-19, sluggish growth that is well below pre-pandemic levels continues, even as the threat of COVID-19 subsides. Other factors contributing to the slow growth in international trade include China’s structurally driven slowdown and Russia’s invasion of Ukraine, with its concomitant energy price inflation.
Moreover, exceptionalism in the multilateral system is also fuelling countries to form new regional alliances. For example, South Korean Trade Minister, Ahn Duk-geun, has said that momentum for the Regional Comprehensive Economic Partnership between South Korea, China and Japan was being strengthened in light of Trump’s tariffs. These regional alliances further undermine the spirit of multilateralism, with Jagdish Bhagwati, an influential economist terming these kinds of preferential agreements outside the WTO system as ‘termites in the trading system’.
Conclusion
Whilst Trump’s tariffs under the IEEPA, framed in terms of national security, form the most recent and dramatic affront to the international trade order, they are part of a larger movement. That is, as countries’ economies and supply chains continue to recover from the COVID pandemic, they have increasingly resorted to more protectionist trade policies, justified on the grounds of ‘national security’. This rise in the resort to exceptionalism based on national security justifications is not consistent with WTO jurisprudence, which consistently shows that the exception is not self-judging and ought to be construed narrowly. Paradoxically, as national security is prioritised over the security of the global trade order, the global security at which the trade system was ultimately directed, is ultimately undermined. For the moment, the only certainty for Members facing Trump’s tariffs is there is no certainty.
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