A major judicial rebuke has dealt a blow to former President Donald Trump’s economic agenda, as a U.S. trade court ruled on Wednesday that his recently imposed “Liberation Day” tariffs were unlawful.
The Court of International Trade in Manhattan, in a decision issued by a three-judge panel, held that Trump exceeded his legal authority by unilaterally implementing tariffs on all imports — a move the court said violated the Constitution’s delegation of trade regulation powers to Congress. The ruling marks a significant check on executive power in the realm of trade policy.
Background:
Trump announced the Liberation Day tariffs in April, proposing a 10% baseline duty on all imported goods, with higher rates for countries with large trade surpluses, notably China. He framed the sweeping action as part of a broader plan to revitalize domestic manufacturing and narrow the trade deficit, invoking the International Emergency Economic Powers Act (IEEPA) by declaring the trade imbalance a national emergency.
However, the court found that the IEEPA does not authorize the use of tariffs for this kind of economic coercion, stating:
“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.”
Legal Challenge:
The ruling came after lawsuits were filed by five small U.S. importers and 13 states, led by Oregon Attorney General Dan Rayfield, who labeled the policy as “unlawful, reckless, and economically devastating.” The Department of Justice tried to have the suits dismissed, arguing that plaintiffs lacked standing and had not yet experienced direct harm — a position the court rejected.
Political and Economic Implications:
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Legal Precedent: The court reaffirmed the constitutional limits on presidential power, particularly in trade, where Congress retains exclusive authority.
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Market Reaction: Financial markets reacted positively. The U.S. dollar strengthened against traditionally safe-haven currencies like the Swiss franc and Japanese yen, signaling investor relief.
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Appeal Likely: The Trump-aligned DOJ is expected to appeal the decision to the Federal Circuit Court in Washington, D.C., and possibly escalate it to the Supreme Court.
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Political Fallout: This ruling, combined with Elon Musk’s recent resignation over policy disagreements, could amplify concerns among Trump critics about his economic leadership and use of executive authority.
In sum, the court’s decision underscores the constitutional separation of powers and delivers a major legal challenge to Trump's economic nationalism. It may set a precedent for how far future presidents can go in leveraging emergency powers for trade actions.
