On Thursday, a federal appeals court reinstated President Donald Trump’s extensive tariffs, a decision that follows a ruling from the U.S. Court of International Trade the previous day, which found that Trump had exceeded his authority in imposing these duties.

The United States Court of Appeals for the Federal Circuit did not provide detailed reasoning but has required the plaintiffs to submit a response by June 5, with the administration required to reply by June 9.

The initial ruling from the International Trade Court raised concerns that it could halt or at least postpone Trump’s “Liberation Day” tariffs affecting most U.S. trading partners, as well as specific import levies on goods from Canada, Mexico, and China.

These tariffs stem from accusations that these countries facilitate the influx of fentanyl into the United States, a drug crisis that has garnered significant attention in U.S. policy circles.

Despite the uncertainty generated by the International Trade Court's decision, senior officials in the Trump administration expressed confidence that they could win the appeal or utilize other presidential powers to ensure that the tariffs would remain in place.

The White House indicated that the ruling would not obstruct ongoing negotiations with key trading partners, including Japan, which has scheduled talks in Washington, and an Indian trade delegation expected next week.

Financial markets exhibited a cautious optimism following the trade court’s ruling; however, stock gains were muted amid expectations of a protracted appeals process.

Analysts noted that the broader uncertainty surrounding Trump’s tariffs has already inflicted significant financial damage, with companies facing over $34 billion in increased costs and lost sales due to these levies.

Compounding the situation, a separate federal court ruling found that Trump had overstepped his legal authority by imposing reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA).

This finding primarily affected tariffs of 10% on goods from numerous trading partners and separate 25% tariffs on selected goods from Canada, Mexico, and China related to fentanyl.

Unlike the broader ruling from the International Trade Court, this decision applied only to the party that brought the case.

The Court of International Trade ruled that Trump had misused his authority, stating that the Constitution grants Congress sole power to regulate commerce with foreign nations.

The court emphasized that it would not assess the prudence or effectiveness of Trump's tariffs but noted that his actions were impermissible under federal law.

The Trump administration swiftly appealed the permanent injunction issued by the court, arguing against the ruling's validity.

The tariffs in question had been imposed under the IEEPA, a law generally used for international sanctions and emergencies.

President Trump asserted that the U.S. trade deficit constituted a national emergency justifying the tariffs, which included a baseline 10% duty applicable to almost all imports.

As the legal battles continue, Trump has claimed that these tariffs will help revitalize American manufacturing and address the nation’s trade deficit, driving a wedge between the U.S. and its trading partners.

Initial responses from Asian policymakers were measured, as Japan's economy minister requested to examine the court’s ruling in detail, while South Korea noted a significant decrease in the effective tariff rate on its exports.

Legal challenges to the tariffs are ongoing, with at least five other lawsuits still in the courts.

One of the plaintiffs, representing small businesses adversely affected by these tariffs, argued that the broad application of tariffs is detrimental to their operations.

Meanwhile, the Justice Department has contended that the legal disputes should be dismissed on the grounds that the plaintiffs have not been harmed by tariffs not yet paid, reiterating that only Congress has the authority to challenge a national emergency declared under the IEEPA.