US trade court blocks Trump’s sweeping tariffs, citing executive overreach

In a major blow to one of President Donald Trump’s key economic policies, a US federal court has blocked the administration’s sweeping global tariff regime, ruling that the White House overstepped its constitutional authority.

The Court of International Trade, based in Manhattan, determined that the International Emergency Economic Powers Act (IEEPA)—the 1977 law cited by Trump to justify the import duties—does not authorize the president to impose such wide-reaching tariffs. Instead, the court stated, only Congress has the exclusive power to regulate international commerce under the Constitution.

The ruling immediately halts one of the most controversial components of Trump’s economic platform. The administration responded swiftly by filing an appeal.

Legal Challenge from Small Businesses

The decision stems from a lawsuit brought by the Liberty Justice Center on behalf of five small US businesses importing goods from countries targeted by the duties. This case marks the first significant legal pushback against Trump’s self-declared “Liberation Day” tariffs, which imposed a 10% baseline duty on most imports, with some products—particularly from China—facing tariffs as high as 145%.

The court also blocked a separate set of tariffs aimed at China, Mexico, and Canada, which the administration claimed were necessary to combat drug trafficking and illegal immigration. However, tariffs on specific items like cars, steel, and aluminum, implemented under a different statute, remain unaffected by this ruling.

Sharp Reactions from Both Sides

The White House criticized the decision, with Deputy Press Secretary Kush Desai asserting that “unelected judges” should not interfere with national emergency measures. “President Trump pledged to put America First,” Desai said, “and the administration is committed to using every lever of executive power.”

On the other hand, New York Attorney General Letitia James, representing one of 12 states involved in the lawsuit, welcomed the outcome. “No president has the power to single-handedly raise taxes,” she said. “These tariffs would have worsened inflation, harmed businesses, and led to job losses nationwide.”

Markets React Positively

The court’s ruling boosted global markets, with Asian stock indices rising and US futures climbing. The US dollar strengthened against traditional safe-haven currencies like the Japanese yen and Swiss franc.

Stephen Innes of SPI Asset Management remarked that the judgment marked a “structural pivot” in US trade policy, signaling a shift from “strongman tariffs to institutional guardrails.” He wrote: “The Oval Office isn't a trading desk, and the Constitution isn't a blank cheque.”

What Happens Next?

Though the ruling is in effect, most tariffs had already been paused, and the White House now has 10 days to complete the formal process of suspension. Pending appeal, tariffs must still be paid at the border for now, according to former CBP official John Leonard.

If the appeal fails, US Customs and Border Protection (CBP) will issue refund instructions, and businesses affected by the tariffs may be eligible to receive their money back—with interest.

Observers note that the appeals court might be more favorable to Trump, but for now, the judgment is being viewed as a significant judicial check on executive power.

Background: A Tariff Regime Like No Other

Trump introduced the unprecedented tariff scheme on April 2, claiming it would revitalize US manufacturing and protect jobs. The plan applied a 10% blanket tariff, with additional “reciprocal tariffs” up to 145% on Chinese goods, and varying rates for other countries and blocs such as the EU, UK, Canada, and Mexico.

The policy triggered global economic uncertainty, worsened by Trump’s subsequent reversals and pauses during trade negotiations. A prolonged US-China trade war saw tit-for-tat tariff hikes, but tensions eased with duties reduced—US tariffs on Chinese goods fell to 30%, and China’s fell to 10%.

In parallel, the US and UK reached a deal to reduce bilateral tariffs, while threats of a 50% US tariff on EU goods were postponed after talks with European Commission President Ursula von der Leyen.

A Turning Point in Trade Policy?

The court’s ruling may redefine the limits of presidential authority over international trade. It also opens the door for Congress to reassert its constitutional role in regulating commerce—potentially reshaping US trade policy as the country heads into a contentious election cycle.

As the legal battle continues, businesses and investors are watching closely. For now, the message from the court is clear: executive overreach has its limits.

Copied