(Updated) Trump's 'Liberation Day' tariffs back on after appeals court decision

U.S. President Donald Trump's tariffs are still hitting most countries around the world after a federal appeals court temporarily paused a decision from the U.S. Court of International Trade.

The lower court's Wednesday decision found Trump's use of an emergency powers law to impose sweeping tariffs exceeded his authority.

That lower court ruling says the Trump administration was not able to demonstrate how broad-based tariffs affected the fentanyl trafficking it used as justification for the tariffs.

The ruling from the appeals court says that the Court of International Trade's injunction is stayed while the appeals court considers arguments.

The plaintiffs have until June 5 to reply to the Trump administration's appeal of the lower court's decision.

Hours earlier, Prime Minister Mark Carney said in the House of Commons that the original ruling was "welcome" but Canada's trade relationship with the U.S. is still threatened.

Carney added that Canada's "trading relationship with the United States is still profoundly and adversely threatened" by "unjustified" tariffs on steel, aluminum and the auto sector.

"It therefore remains the top priority of Canada's new government to establish a new economic and security relationship with the United States and to strengthen our collaboration with reliable trading partners and allies around the world," he said.

After question period, Finance Minister François-Philippe Champagne said he hadn't seen the appeal court decision yet but the government's goal of fighting for Canadian industry and workers hadn't changed.

Before the pause on the tariff injunction, White House Press Secretary Karoline Leavitt said she expects the appeal will go all the way to the U.S. Supreme Court and accused the federal court of "judicial overreach."

She said the administration will abide by the federal court's ruling but noted that there are other legal avenues Trump can take to impose tariffs.

"The administration is willing to use those. As you know, the administration has already applied section 232 tariffs on specific industries," Leavitt said at the White House press briefing Thursday before the appeals court decision.

Section 232 is the portion of U.S. trade law Trump used to implement tariffs on steel, aluminum and automobiles, which remain in place.

Candace Laing, Canadian Chamber of Commerce president, said "the end of this trade war with the U.S. will not come through the courts."

"It will come when we have negotiated a durable new agreement on trade that is trusted and respected by all involved," she said in a media statement responding to the lower court's ruling.

Leavitt said the Trump administration still plans to negotiate new trade deals even as the courts decide the future of what Trump has called "Liberation Day" tariffs.

"(Other countries) also probably see how ridiculous this ruling is, and they understand the administration is going to win and we intend to win," she said.

The original decision at the New York-based federal court was delivered by a panel of three judges. One was appointed by Trump during his first administration, another by former president Barack Obama and the third by former president Ronald Reagan.

The ruling said "any interpretation" of the International Emergency Economic Powers Act that "delegates unlimited tariff authority is unconstitutional." The decision separately blocked the fentanyl tariffs because it said "they do not deal with the threats" Trump cited to justify the duties in his executive order.

Mona Paulsen, an associate international economic law professor at the London School of Economics, said this was a straightforward question for the court to answer.

"They don't scrutinize the national emergency. They look at that reasonable relationship," she said. "They basically just find there's no direct link here between the imposition of tariffs and the unusual and extraordinary threat that the trafficking orders said it was trying to address."

Trump has said he imposed the duties to encourage other countries to make trade deals with the U.S. He's also claimed they'll bring manufacturing back to America and fill federal coffers.

"We actually see almost contradictory objectives sometimes being put into play, where it doesn't make sense that you would want a tariff to both increase revenue for the government and also be leverage," Paulsen said.

"Because as leverage in negotiation, let's say with Canada, you would expect that in negotiations that the tariffs would go away, but not if they're source of government revenue. And you can't have it both ways."

The president relied heavily on the International Emergency Economic Powers Act, better known as IEEPA, to implement many of his tariffs. While the national security statute gives the U.S. president authority to control economic transactions after declaring an emergency, it had never been used before to impose tariffs.

Trump declared an emergency at the northern border to hit Canada with economywide tariffs in March. He partially paused those levies a few days later for imports that comply with the Canada-U.S.-Mexico Agreement on trade.

The next month, he declared America's trade deficits also amounted to a national emergency in order to hit nearly every country with tariffs. The president walked back the most devastating duties a few hours later but left a 10 per cent universal tariff in place.

Trump has continued to use IEEPA to threaten unpredictable increases to tariffs. After recently vowing to increase duties on the European Union to 50 per cent starting in June, he pushed the date back to July.

— With files from Catherine Morrison in Ottawa. 

This report was first published by The Canadian Press on May 29, 2025.