A US trade court has halted President Donald Trump’s tariffs in a comprehensive ruling, stating that the president exceeded his authority by imposing broad duties on imports from countries that export more to the United States than they import.
The Court of International Trade asserted that the US Constitution grants Congress sole authority to regulate commerce with foreign nations, a power that the president’s emergency powers cannot override to protect the US economy.
“The court does not evaluate the wisdom or potential effectiveness of the president’s use of tariffs as leverage. This use is impermissible not because it is unwise or ineffective, but due to the restrictions placed by [federal law],” a three-judge panel noted in its ruling.
Shortly after, the Trump administration filed a notice of appeal and challenged the court’s authority.
The decisions made by the Manhattan-based Court of International Trade, which addresses disputes regarding international trade and customs laws, can be appealed to the US Court of Appeals for the Federal Circuit in Washington DC and ultimately to the US Supreme Court.
Businesses of all sizes have felt the effects of Mr. Trump’s rapid imposition of tariffs.
Mr. Trump has made imposing tariffs on US importers for goods from foreign nations a key component of his ongoing trade wars, which have significantly disrupted global trade and unsettled financial markets.
Companies, regardless of their size, have been affected by Mr. Trump’s rapid implementation of tariffs and sudden policy changes while they manage supply chains, production, staffing, and pricing.
A White House spokesperson claimed that US trade deficits with other nations amounted to “a national emergency that has devastated American communities, left our workers behind, and weakened our defense industrial base—facts that the court did not contest.”
“It is not for unelected judges to determine how to properly address a national emergency,” said Kush Desai, the spokesperson, in a statement.
Financial markets reacted positively to the ruling.
The US dollar strengthened following the court’s order, surging against currencies such as the euro, yen, and Swiss franc in particular.
Wall Street futures rose, and equities across Asia also experienced gains.
If upheld, the ruling undermines Mr. Trump’s strategy of leveraging steep tariffs to extract concessions from trading partners, bring manufacturing jobs back to the US, and reduce a $1.2 trillion US goods trade deficit, which were central to his campaign promises.
Without the immediate leverage of the 10% to 54% tariffs declared by the president under the International Emergency Economic Powers Act (IEEPA)—designed to address “unusual and extraordinary” threats during a national emergency—the Trump administration would need to engage in slower, more extensive trade investigations under different trade laws to support its tariff threats.
The ruling emerged from two lawsuits, one initiated by the nonpartisan Liberty Justice Center on behalf of five small US businesses that import goods from the targeted countries, and the other filed by 13 US states.
The businesses, which range from a New York wine and spirits importer to a Virginia-based producer of educational kits and musical instruments, argue that the tariffs will adversely affect their operations.
“There is no question here of narrowly tailored relief; if the challenged tariff orders are unlawful as to plaintiffs, they are unlawful as to all,” the trade court stated in its ruling.
At least five additional legal challenges to the tariffs are currently pending.
Oregon Attorney General Dan Rayfield, a Democrat leading the states’ lawsuit, described Mr. Trump’s tariffs as unlawful, reckless, and economically damaging.
“This ruling reaffirms that our laws matter and that trade decisions can’t be made on the president’s whim,” Mr. Rayfield stated.
Mr. Trump has asserted broad authority to impose tariffs under IEEPA, a law historically used to enforce sanctions on US enemies or freeze their assets.
Mr. Trump is the first president to utilize it for imposing tariffs.
The Justice Department has argued that the lawsuits should be dismissed because the plaintiffs have not suffered harm from tariffs they have not yet paid, and that only Congress—not private businesses—can challenge a national emergency declared by the president under IEEPA.
When imposing the tariffs in early April, Mr. Trump characterized the trade deficit as a national emergency justifying his 10% across-the-board tariff on all imports, with higher rates for countries experiencing the largest trade deficits with the United States, especially China.
Many of the tariffs targeting specific countries were paused a week later.
On May 12, the Trump administration announced it was also temporarily lowering some of the steepest tariffs on China while negotiating a longer-term trade deal.
Both nations agreed to reduce tariffs on one another for at least 90 days.
