Federal Court Blocks Most of Trump’s Tariffs but Market Uncertainty Remains
A federal court on May 28 ruled that most of President Trump’s tariffs that were instituted on the broad claim of national emergencies are illegal.
As a result of the decision by the Court of International Trade, tariffs announced by Trump against several dozen nations on April 2 under the moniker of “Liberation Day” have been rescinded. “The challenged Tariff Orders will be vacated and their operations permanently enjoined,” a three-judge panel (an Obama appointee, Reagan appointee and Trump appointee) unanimously ruled.
The Justice Department has filed an appeal, and the case could go all the way to the Supreme Court.
The trade court order also annulled Trump’s executive orders imposing 25% duties on Canadian and Mexican goods and a 20% tariff on Chinese products over concerns about border security and drug trafficking.
Since the Liberation Day announcement, Trump rolled back tariffs against all trading partners to a 10% rate. The president also threatened to impose 50% tariffs on the European Union on June 1 but later announced he would delay the tariffs until July 9 to allow more time for trade negotiations. None of these tariffs will be effective as a result of the court order.
Many Tariffs Remain in Place
The president still has other tools at his disposal to impose tariffs. Moreover, the trade court ruling does not mean the end of all tariffs.
Other tariffs that Trump has imposed, such as those under Section 232 of the Trade Expansion Act of 1962, were not covered in the court ruling. Trump used Section 232 in March to expand existing steel and aluminum tariffs, and place a 25% tariff on foreign auto imports.
Countervailing (anti-subsidy) and anti-dumping duties on Canadian lumber currently totaling 14.5% that were imposed by the U.S. Commerce Department remain in effect, and these duties are expected to more than double later this year.
Tariff Whiplash Has Already Hurt Housing Affordability
The on-again, off-again nature of the tariffs and threats of higher levies have already had a negative effect on housing affordability by creating business uncertainty and disrupting building material supply chains.
When asked about the impact of tariffs on their business in the April survey of the NAHB/Wells Fargo Housing Market Index, 60% of builders reported their suppliers have already increased or announced increases of material prices due to tariffs. On average, respondents reported that suppliers increased their prices by 6.3% in response to announced, enacted or expected tariffs. Builders estimate that these actions on tariffs will add $10,900 to the average cost of a new home.
And in a May survey of builders, 78% reported difficulties pricing their homes recently due to uncertainty around material prices.
NAHB estimates that approximately 7% of all goods used in new multifamily and single-family residential construction originated from a foreign nation in 2024. The cost of building materials has already risen by 41.6% in the five years since the pandemic, which is far higher than the rate of inflation (21.9%).
The situation on the tariff front remains fluid, and the trade court decision illustrates the need for the Trump administration to seek fair, equitable deals with America’s trading partners that roll back tariffs on building materials.