After suffering a major blow to key parts of his economic policy, US President Donald Trump is expected to find an alternative.
The US Court of International Trade ruled on Wednesday that the president overstepped his authority when he invoked the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on several countries.
The Manhattan-based court not only ordered a permanent suspension of most of Trump's tariffs, but also blocked future changes to them.
The three-judge panel gave the White House 10 days to complete the process of suspending the tariffs. The Trump administration quickly appealed the ruling.
CNBC reviewed the report, and Goldman Sachs economists said the White House has several levers to make the issue temporary.
"While the ruling is a setback for the Administration's tariff plans and adds uncertainty, it is unlikely to change revenues for most of the U.S.'s major trading partners," Goldman Sachs analysts said in a client note.
They added that "for now, we expect the Trump Administration to find another way to impose tariffs."
Available options
The Wall Street bank reported that the ruling will halt Trump's 10% basic tariffs on most imports, as well as additional tariffs on China, Canada and Mexico. However, it will not halt tariffs on specific sectors such as steel, aluminum and automobiles.
However, Goldman Sachs said the Trump administration has other legal tools to impose tariffs. These include Section 122 of the Trade Act of 1974, Section 301 and Section 338 of the Trade Act of 1930.
First, Section 122
Section 122 does not require a formal investigation, so it could be one of the quickest ways to avoid court hurdles.
Goldman Sachs analysts said, "The administration could quickly replace the flat 10% tariffs under Section 122 with a similar 15% tariff." But they noted that the measure would only last for a maximum of 150 days, after which congressional action would be required.
Second: Section 301
President Trump could also open the way for bureaucratic procedures to quickly launch Section 301 investigations and impose tariffs on major US trading partners, but Goldman Sachs said the process would likely take at least a few weeks.
Third and Fourth: Enforceable Provisions
Tariffs under Section 232, which already apply to imports of steel, aluminum and automobiles, could be expanded to other sectors. Meanwhile, Section 338 allows the president to impose tariffs of up to 50% on imports from countries that discriminate against the US.
Goldman Sachs noted that the latter has never been used before.
What about the Supreme Court?
Cassidy Levy Kent partner James Ransdell said the ruling is the first of several pending cases and the first substantive decision by a federal court to "address the substance of the plaintiffs' objections."
Ransdell added that the Trump administration's appeal is "unusual" and suggests the government may be hard at work preparing a request for an emergency stay on the executive order.
Ransdell added that it's "certainly possible" the Supreme Court will make a final decision.
Stephen Blitz, chief US economist at TS Lombard, said Trump "has a very good understanding" of how to manipulate the courts to buy himself time and get things his way.
Stocks and US Dollar Rise
Global stock markets broadly rose on Thursday as investors reacted to the court ruling. Asia-Pacific markets closed mostly higher, and U.S. stock futures also rose.
Dow Jones Industrial Average futures rose 1.2%, while S&P 500 futures rose 1.5%. The tech-heavy Nasdaq 100 index led the gains, rising 1.8%.
European markets, however, reacted more mutedly, with the pan-European STOXX 600 index up just 0.38% by midday.
Jordan Rochester, head of FICC strategy at Mizuho EMEA, said the limited market reaction was because "President Trump still has multiple options for raising tariffs."
The situation is more complicated, but President Trump's ultimate goal remains the same. Rochester said in politics, where there's a will, there's a way.
The U.S. dollar edged up against major currencies, with the U.S. Dollar Index up 0.14%. Since the start of the year, the US Dollar Index has fallen nearly 8% amid continued market turmoil.
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