Donald Trump’s sweeping global tariffs have been blocked by a US federal court – plunging the US President’s seismic trade reset into turmoil.
The Court of International Trade found the president overstepped his authority by imposing across-the-board duties on imports from US trading partners.
In a devastating ruling, the court said the US Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard America’s economy.
Markets in Asia were sharply up on the back of the shock ruling issued around midnight UK time.
“The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage,” a three-judge panel said in the decision to issue a permanent injunction on the blanket tariff orders issued by Trump since January.
“That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it.”
The judges also ordered the Trump administration to issue new orders reflecting the permanent injunction within 10 days.
Trump himself had yet to comment directly on the ruling. Taking to Truth Social overnight, he posted a couple of memes – including one showing a billboard displaying his image, with the message: “President Trump was right about everything.”
The court invalidated with immediate effect all of Trump's orders on tariffs since January that were rooted in the International Emergency Economic Powers Act (IEEPA), a law meant to address “unusual and extraordinary” threats during a national emergency.
The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminium, using a different statute.
The decisions of the Manhattan-based Court of International Trade, which hears disputes involving international trade and customs laws, can be appealed to the US Court of Appeals for the Federal Circuit in Washington DC, and ultimately the US Supreme Court.
Trump has made charging US importers tariffs on goods from foreign countries the central policy of his ongoing trade wars, which have severely disrupted global trade flows and unsettled financial markets.
A White House spokesperson on Wednesday said US trade deficits with other countries constituted “a national emergency that has decimated American communities, left our workers behind, and weakened our defence industrial base – facts that the court did not dispute.”
“It is not for unelected judges to decide how to properly address a national emergency,” Kush Desai, the spokesperson, said in a statement.
The ruling, if it stands, blows a giant hole through Trump's strategy to use steep tariffs to wring concessions from trading partners. It also creates deep uncertainty around multiple simultaneous negotiations with the European Union, China and many other countries.
Trump has promised Americans that the tariffs would draw manufacturing jobs back to US shores and shrink a $1.2 trillion US goods trade deficit, which were among his central campaign promises.
The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small US businesses that import goods from countries targeted by the duties and the other by 12 US states.
The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, have said the tariffs will hurt their ability to do business.
“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 judges wrote in their decision.
At least five other legal challenges to the tariffs are pending.
Oregon Attorney General Dan Rayfield, a Democrat whose office is leading the states' lawsuit, called Trump's tariffs unlawful, reckless and economically devastating.
“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” Mr Rayfield said in a statement.
In imposing the tariffs on Trump’s “Liberation Day” on April 2, Trump called the trade deficit a national emergency that justified his 10% across-the-board tariff on all imports, with higher rates for countries with which the United States has the largest trade deficits, particularly China.
Many of those country-specific “reciprocal” tariffs were paused a week later.
The Trump administration on May 12 said it was also temporarily reducing the steepest tariffs on China while working on a longer-term trade deal.
Both countries agreed to cut tariffs on each other for at least 90 days.
