More Tariffs Turmoil
June 05, 25
Stand by for more tariffs turmoil.
Donald Trump caused global mayhem with his "Liberation Day" announcement on 2 April, imposing reciprocal import duties on all US trading partners.
He pressed the pause button a week later, offering a 90-day reprieve.
But judges in Washington DC are now about to discuss the legality of his reciprocal tariffs and whether he can actually enforce them.
The question is of critical importance to the diamond industry, which has been all but paralyzed since Trump dropped his bombshell.
As if it didn't have enough to cope with already - plunging demand for natural goods, falling prices, soaring sales of lab growns, Russian sanctions - and now the threat of a 26 per cent reciprocal tariff on all diamonds imported from India, not to mention a sliding scale of tariffs on every other mining or manufacturing nation.
There was a flurry of legal activity in the US last week in the wake of the tariffs announcement. The Manhattan-based Court of International Trade (CIT) ruled that Trump had overstepped the mark, and it issued a "permanent injunction" on almost all the tariffs he'd imposed.
That was last Wednesday (28 May) and it was the cause of some (very short-lived) celebration.
Less than 24 hours later a higher court, the US Court of Appeals for the Federal Circuit in Washington DC, went and reinstated them. The permanent injunction was, it turned out, anything but.
In the first court case, a panel of three judges at the Court of International Trade, ruled that Trump simply didn't have the authority to impose tariffs using the International Emergency Economic Powers Act (IEEPA), a federal law enacted in 1977.
It does, admittedly, grant the president broad authority to regulate international commerce and financial transactions, but only after declaring a national emergency in response to an "unusual and extraordinary threat" from overseas. There was no such threat and no such national emergency.
The case was brought before the CIT by the Liberty Justice Center (LJC), a nonprofit law firm dedicated to protecting the economic liberty of US citizens, and by 12 US states.
The following day the appeal court restored Trump's ability to levy both the reciprocal and the baseline 10 per cent tariffs, but only pending a fuller hearing.
Those challenging the tariffs - LJC and the 12 states - must file their papers by the end of today (5 June).
Trump's team must respond by 9 June, and a court hearing is likely to take place soon after that date.
This kind of uncertainty is not helping the diamond industry.
And its plea for a special exemption seems, so far at least, to have fallen on deaf ears.
The World Diamond Council (WDC), representing De Beers, Tiffany & Co, Signet, Chow Tai Fook and other big hitters, says that imposing tariffs wouldn't protect US diamond miners from foreign competition - because the US has no diamond mines.
It's a compelling argument, but Trump is a big-picture rather than a detail guy, and, in the scheme of things, exempting diamonds is not likely to be top of his to-do list.
He has, however, provided the estimated 30,000 people currently descending on Vegas for JCK, with plenty to talk about.
Have a fabulous weekend.