What's next for Trump’s tariffs after federal court ruling?

A federal court blocked President Donald Trump’s plan to impose sweeping tariffs on almost every country globally.

The Associated Press reported that a three-judge panel of the U.S. Court of International Trade ruled on Wednesday that Trump overstepped his authority when invoking the 1977 International Emergency Economic Powers Act to declare a national emergency to justify his tariffs plan. 

Here’s where things stand. 

What does the court ruling mean for Trump’s tariffs?

Dig deeper:

The U.S. Court of International Trade noted that President Donald Trump retains more limited power to impose tariffs to address trade deficits under another statute, the Trade Act of 1974. The Associated Press reported that this law restricts tariffs to 15% and only for 150 days with countries with which the United States runs big trade deficits.

The AP noted that the court’s decision blocks the tariffs Trump enforced in April on almost all U.S. trading partners and levies he imposed before that on China, Mexico and Canada.

RELATED: Federal court blocks Trump from imposing sweeping tariffs under emergency powers law

Companies will have to reexamine the way they run their supply chains, possibly expediting shipments to the U.S. to ease the danger that the tariffs will be reinstated on appeal.

Wendy Cutler, a former U.S. trade official who is now vice president at the Asia Society Policy Institute, told the Associated Press that the court's decision "throws the president’s trade policy into turmoil."

"Partners negotiating hard during the 90- day tariff pause period may be tempted to hold off making further concessions to the U.S. until there is more legal clarity," Cutler told the AP. 

Why did the court rule against Trump?

The backstory:

The Trump administration contended that courts had approved then-President Richard Nixon’s emergency use of tariffs in a 1971 economic and financial crisis that happened when the U.S. devalued the dollar by ending a policy that linked the U.S. currency to the price of gold. 

According to the Associated Press, the Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language later used in the International Emergency Economic Powers Act (IEPPA).

The court disagreed, deciding that Trump’s sweeping tariffs exceeded his authority to regulate imports under IEEPA. It also said the tariffs did nothing to deal with problems they were supposed to address. In their case, the states noted that America's trade deficits hardly amount to a sudden emergency. The United States has racked them up for 49 straight years in good times and bad.

On April 2, Trump enforced reciprocal tariffs of up to 50% on countries with which the U.S. runs a trade deficit and 10% baseline tariffs on almost everybody else. 

Trump later suspended the reciprocal tariffs for 90 days to give countries time to agree to reduce barriers to U.S. exports. But he kept the baseline tariffs in place. According to the Associated Press, Trump claimed he had power to act without congressional approval. He justified the taxes under IEEPA by declaring the United States' longstanding trade deficits "a national emergency."