Washington: In a significant legal setback to US President Donald Trump, a federal trade court struck down the implementation of his proposed ‘Liberation Day’ import tariffs, ruling that he exceeded his constitutional authority.
The three-judge panel at the Court of International Trade in Manhattan determined Wednesday (US time) that Trump’s across-the-board duties on countries running trade surpluses with the US violated the scope of powers granted to the presidency under the International Emergency Economic Powers Act (IEEPA), according to local media reports.
The Trump administration sought to defend the tariffs by referencing the IEEPA, a statute intended to address “unusual and extraordinary” risks during a national emergency.
Officials claimed that Trump’s actions were essential to confront a national threat stemming from trade imbalances, especially with nations like China and the European Union.
They warned the court that blocking the tariffs could jeopardise ongoing trade truce negotiations with China and potentially reignite tensions between India and Pakistan.
In court filings, Trump’s legal team argued that the President had used his emergency economic powers strategically to de-escalate the situation in South Asia.
They alleged that Trump’s tariff threats helped broker a ceasefire between India and Pakistan in May, following a terror attack in Jammu and Kashmir’s Pahalgam April 22, in which Pakistan-based militants were involved. However, New Delhi has maintained that the Trump administration did not have any say in the conflict between the two nations and Pakistan urged India to halt the military action.
“Trade negotiations are at a delicate stage,” officials told the court, pointing to July 7 as the deadline to finalise pending agreements with several countries.
But the court was not persuaded. In its ruling, the panel declared that the President cannot assume “unbounded” authority over trade policy.
“Congress did not delegate unbounded powers to the President under IEEPA,” the court said. “The Constitution gives Congress exclusive authority to regulate commerce with foreign nations. That authority is not displaced simply because the President invokes emergency powers.”
The court clarified that its decision did not assess the wisdom or effectiveness of using tariffs as a policy tool but focused strictly on legality.
“The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because federal law does not allow it,” the ruling read.
The bench added, “An unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government.”
The ruling came in response to two lawsuits — one filed by the Liberty Justice Center on behalf of five small American businesses that rely on imports from targeted countries, and another by 13 US states.
Plaintiffs argued that the tariffs would severely harm their business operations and increase costs, without due legislative process. At least five additional legal challenges to the tariff measures remain pending across the country.
Despite the ruling, the Trump administration filed an immediate notice of appeal, indicating the former President’s determination to continue the legal fight.
Trump had unveiled the tariffs April 2, imposing a baseline 10 per cent duty, with higher rates aimed at countries like China and members of the European Union.
However, the announcement triggered turbulence in financial markets, forcing a temporary pause on several country-specific levies within a week.
In another move to stabilise trade relations, the Trump administration said May 12 that it would temporarily scale back the steepest tariffs on China while pursuing a broader trade deal.
Both countries agreed to reduce some tariffs on each other for a period of at least 90 days.
In reaction to the court’s decision, White House deputy chief of staff Stephen Miller sharply criticised the judiciary, posting on social media: “The judicial coup is out of control.”
