Trump Allies Eye Increased Tariffs After Court Ruling

By Ashley Belanger – May 29, 2025

Background: Emergency Tariffs vs. Congressional Authority

In late April 2025, the Trump administration invoked the International Emergency Economic Powers Act (IEEPA) to impose a suite of new tariffs—ranging from 15% to 25%—on imported electronics, machinery, and raw materials. The administration claimed these levies would curb drug and human trafficking and address long-standing trade deficits. Opponents immediately challenged the move, arguing that IEEPA does not grant the President carte blanche to reshape tariff policy without congressional approval.

Court Decision Details

On May 28, a three-judge panel of the US Court of International Trade permanently enjoined the contested tariff orders. The panel—comprised of Judge Timothy Reif (Trump appointee), Judge Gary Katzmann (Obama appointee), and Judge Jane Restani (Reagan appointee)—held that under IEEPA, the President may only target an “unusual and extraordinary” threat to national security, and measures must directly address that threat. Broad trade deficits and trafficking leverage failed both prongs. The court wrote:

The Government’s reading would permit any infliction of a burden on a counterparty to exact concessions, unbounded by any nexus to a specific threat. Surely this is not what Congress intended.

Technical Analysis: Harmonized Codes and Hardware Impact

The blocked orders covered over 2,500 Harmonized System (HS) codes, including HS 8542 for integrated circuits, HS 8471 for automatic data-processing machines, and HS 8418 for refrigeration equipment. Duty increases of up to 25% would have added roughly $5.6 billion annually to the cost of semiconductor imports alone, according to estimates by the Semiconductor Industry Association. Cloud providers estimate an additional $3–4 per server instance hour due to higher capital expenditure on tariff-hit hardware.

Immediate Appeal and Political Ramifications

Within hours of the ruling, the Trump team filed a notice of appeal, vowing to bring the case to the Supreme Court. The administration argues that defining a national emergency constitutes a political question, outside judicial purview. White House spokesperson Kush Desai reaffirmed the President’s commitment to “using every lever of executive power” to address trade imbalances that, in the administration’s view, have weakened domestic manufacturing and the defense industrial base.

Impact on Semiconductor Supply Chains

Industry leaders warn that a tariff-induced price shock would disrupt multi-stage supply chains. Companies like TSMC and Samsung, which export advanced 5-nanometer wafers, would see duty increases of nearly $200 per wafer. Equipment makers such as ASML—whose EUV lithography systems carry a base price north of $150 million—anticipated additional customs duties exceeding $15 million per tool. These costs risk delaying volume production ramps for AI accelerators and 5G modems.

Alternative Legal Mechanisms for Trade Leverage

Experts note that if IEEPA authority is curtailed, the administration could pivot to:

• Section 301 of the Trade Act – Requires a detailed investigation by the US Trade Representative, followed by a public notice and comment period, generally a 6–12 month process.
• Section 232 National Security Tariffs – Permits tariffs on goods deemed critical to security, such as steel and aluminum, but subject to interagency review and potential congressional override.
• Emergency Trade Authority Renewal – Congress could amend IEEPA to explicitly validate or revoke broad tariff powers, although bipartisan support may be limited.

Global Trade Framework and WTO Considerations

The World Trade Organization (WTO) has already received requests from the EU and China to consult on the blocked measures. If the administration pursues new tariffs under Section 301 or 232, similar disputes are likely. A protracted WTO panel review can take 18–24 months, during which retaliatory duties could escalate, further straining US alliances in Asia and Europe.

Sector-Specific Consequences: Cloud Computing and Hardware Vendors

Leading cloud providers—AWS, Azure, and Google Cloud—forecast a 7% increase in server and storage system purchase costs if the tariffs had taken effect. Based on typical total cost of ownership (TCO) models, an average hyperscale data center with 100,000 servers might incur $20 million in additional capital expenditure, impacting both hosted AI training workloads and consumer pricing.

Expert Perspectives and Market Reactions

• Yale Budget Lab Director Ernie Tedeschi called the court block a temporary reprieve, warning that the administration could pursue other authorities to reimpose levies.
• Investment Bank UBS issued a note stating that policy uncertainty “remains elevated,” and that equity markets in tech hardware sectors have already priced in a 3–5% margin compression.
• Citi Research analysts predict delays or derailments in bilateral trade talks with Japan and South Korea, as negotiating counterparts adopt a wait-and-see posture amid the legal battle.

Looking Ahead: Legislative and Regulatory Paths

With the judicial route contested, attention turns to Congress. Proposed bills include:

1. Presidential Emergency Tariff Reform Act – Would limit IEEPA to non-tariff sanctions and require congressional notification within 15 days.
2. Trade Tariff Transparency Act – Mandates impact assessments on supply chains and domestic price indices before any new tariff declaration.

Conclusion

The permanent injunction underscores the constitutional allocation of tariff power to Congress and highlights intricate linkages between national security law, global trade norms, and high-technology supply chains. While the court decision offers immediate relief to businesses and consumers, the broader debate over executive authority and trade policy is far from settled. Stakeholders across the semiconductor, cloud, and manufacturing sectors will be watching closely as both legal and legislative strategies unfold.