President Donald Trump warned this Thursday that if a federal appeals court rules against him in a key case regarding the legality of his tariffs, the United States could face an economic crisis comparable to the Great Depression of 1929.
In a message posted on his network Truth Social, Trump stated that the tariffs he has imposed “are having a huge positive impact” on the economy and the stock market, generating “hundreds of billions of dollars” for the country's coffers.
However—true to the intimidating style he has adopted since the beginning of his administration—the president warned that an unfavorable ruling “at such an advanced stage” would make it “impossible to recover or return those massive sums of money,” plunging the nation into a historic recession.
Trump's statement comes during an appeal of a ruling issued in May by the International Trade Court, which determined that the president exceeded his authority by invoking the International Emergency Economic Powers Act (IEEPA) to impose widespread tariffs.
Five small business owners and 12 Democratic states argue that this regulation does not grant authority to impose such broad import tariffs.
The case is now before the Federal Circuit Court of Appeals, which has allowed the tariffs to remain in effect while the dispute is resolved.
The decision could take weeks or months and may eventually reach the Supreme Court.
Trump has used the IEEPA to impose a universal tariff of 10% on most imports, as well as specific tariffs for countries like China, Mexico, Canada, and more recently, Brazil, arguing that these measures aim to curb the influx of fentanyl and irregular immigration.
Even with existing trade agreements —such as those reached with the European Union and Japan— the new tariffs would be called into question if the court limits their ability to invoke the IEEPA.
Despite the legal challenges, experts suggest that Trump could utilize other tools, such as Section 232 of the Trade Expansion Act of 1962 or Section 301 of the Trade Act of 1974, to maintain his tariff strategy, albeit with a more limited scope.
Frequently Asked Questions about Trump's Tariffs and Their Economic Impact
Why does Donald Trump warn about a new Great Depression in the U.S.?
Donald Trump warns that a court ruling against him could trigger an economic crisis similar to the Great Depression of 1929 if the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are lifted. According to Trump, these tariffs have brought significant revenue to the country, and any attempt to reverse them at such an advanced stage could lead to a historic recession.
What are Trump's arguments for imposing tariffs on countries like China, Mexico, and Canada?
Trump justifies the imposition of tariffs on countries like China, Mexico, and Canada as a measure to curb illegal immigration and the smuggling of fentanyl into the U.S. Furthermore, he claims that these tariffs aim to correct decades of trade imbalances and protect the American economy. However, these measures have generated diplomatic tensions and potential reprisals from the affected countries.
What economic impact have Trump's tariffs had on financial markets?
Trump's tariffs have generated significant volatility in financial markets. Although there was initially optimism in Wall Street indices, trade tensions and threats of retaliation have led to substantial declines, including a drop of 14% in the stock market at one point. This reflects the uncertainty and fear among investors regarding the economic future.
How has the international community responded to the tariffs imposed by the United States?
The international community has reacted with concern and retaliatory measures in response to Trump's tariffs. Countries such as Canada and Mexico have announced their own tariffs in response, while the European Union and other trade partners have warned about possible countermeasures. Trade tensions have increased, and negotiations are expected to continue in an effort to mitigate the negative effects on global trade.
What alternatives does Trump have if his ability to impose tariffs under the IEEPA is limited?
If Trump's ability to impose tariffs under the IEEPA is limited, he could resort to other legal tools, such as Section 232 of the Trade Expansion Act of 1962 or Section 301 of the Trade Act of 1974. These alternatives would allow him to maintain his tariff strategy, albeit with a more restricted scope, to continue protecting the U.S. economy according to his arguments.
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