Trump tariffs to stay in place as legal battle erupts

US President Donald Trump can keep collecting import taxes, an appeals court has ruled, a day after a trade ruling found the sweeping global tariffs to be illegal.

A federal appeals court granted a bid from the White House to temporarily suspend the lower court's order, which ruled that Trump had overstepped his power by imposing the international duties.

Wednesday's judgement from the US Court of International Trade drew the ire of Trump officials, who said it was an example of judicial overreach.

Small businesses and a group of states had challenged the measures, which are at the heart of Trump's economic and international agendas.

In its appeal, the Trump administration said the decision issued by the trade court a day earlier had improperly second-guessed the president and threatened to unravel months of hard-fought trade negotiations.

"The political branches, not courts, make foreign policy and chart economic policy," it said in the filing, which threatened to seek emergency relief from the Supreme Court if the earlier ruling was not put on hold.

Shortly before Thursday's tariff reprieve from the appeals court, White House spokesperson Karoline Leavitt told a press briefing: "America cannot function if President Trump, or any other president, for that matter, has their sensitive diplomatic or trade negotiations railroaded by activist judges."

The legal battle placed a question mark over the fate of the tariffs, which have rattled the global economy since the White House began warning of the measures earlier this year.

In February, Trump ordered tariffs on goods from China, Mexico and Canada, saying the move was intended to help address a fentanyl crisis.

Then last month, he unveiled a blanket 10% tariff on goods from most countries around the world, with higher duties on products from certain trade partners, including the European Union and China, considered "bad actors" by the administration.

The White House has since suspended or revised parts of many of those proclamations, while it pursues trade negotiations.

The appeals court decision to keep the tariffs in place for now did not weigh in on the broader questions of the case, which will continue to be litigated. The next hearing in the case is on 5 June.

Trump trade adviser Peter Navarro said even if the White House loses its appeal, it remained committed to tariffs.

"You can assume that even if we lose, we will do it another way," he said on Thursday.

Navarro noted that the lower court's decision rejected the emergency law that Trump invoked to implement the tariffs, and not the import taxes specifically.

Its ruling did not affect other tariffs that Trump has imposed on specific materials such as steel, aluminium and cars, which were justified using different legal authorities.

To impose the tariffs in question, Trump used the International Emergency Economic Powers Act, a law more typically applied in cases of trade sanctions, such as those on Iran.

Those challenging the case said the law did not grant him such sweeping power over trade and tax policy, traditionally the responsibility of Congress.

It put a spotlight on questions around the limits of presidential power, which Trump has tested since re-entering office in January.

Lawyer Ilya Somin, who helped work on the case brought by businesses before the trade court, said he was "guardedly optimistic" that the ruling would be upheld on appeal.

He noted that the trade court order came from justices appointed by both Democratic and Republican presidents, including one by Trump himself.

"It's not normal for the president of the United States to make such an enormous power grab and start the biggest trade war since the Great Depression," he said.

But Terry Haines, founder of the Pangaea Policy, which advises firms on Washington policies, said he thought the decision may not ultimately make a difference once higher courts take the case.

"All these things are going to be litigated through and the president is probably going to be given the benefit of the doubt," he said.

Analysts at Goldman Sachs and other firms said Trump was likely to look for other ways to justify tariffs, if the administration loses this case.

Business owners, while expressing relief, said they did not yet feel like the situation was resolved.

"I was incredibly happy and relieved but I'm also still very cautious," said Kara Dyer, the owner of Boston-based Story Time Toys, which makes toys in China and imports them to the US for sale.

"It's just been so chaotic and so impossible to plan as a business," she said.

"I want this to work its way through our court system so we have a little bit more certainty about what tariffs will be in the future."

However the process plays out, Dmitry Grozoubinski, a former trade negotiator who represented Australia at the World Trade Organization, said the decision would make it more difficult for the White House to suddenly impose tariffs, weakening Trump's ability to use the duties for leverage over other countries.

"It will be a lot harder for him to raise tariffs in the future," he said.

"This was ultimately a negotiation in which President Trump was threatening other countries with a big stick and that stick just got considerably more ephemeral."

With reporting from the BBC's World Business Report and Opening Bell.