President Donald Trump suffered a major legal setback as the U.S. Court of International Trade ruled on May 28, 2025, that he exceeded his authority by imposing sweeping tariffs on imports from multiple countries. The court blocked most tariffs enacted under the International Emergency Economic Powers Act (IEEPA), declaring that only Congress holds the constitutional power to regulate commerce with foreign nations. The ruling threatens a core pillar of Trump’s trade and economic agenda, though the administration swiftly appealed and signaled plans to pursue alternative tariff measures.
Court Ruling: Presidential Authority Overstepped
A three-judge panel at the Manhattan-based Court of International Trade permanently halted the broad tariffs Trump imposed on April 2, 2025, which included a 10% baseline tariff on nearly all imports, along with higher reciprocal tariffs on countries with significant trade surpluses against the U.S. The court found that the president’s use of IEEPA, a 1977 law designed for national emergencies, does not grant him unilateral authority to impose such blanket tariffs. The judges emphasized that the U.S. Constitution assigns exclusive power over foreign commerce to Congress, not the president, and that the emergency statute cannot override this.
The court’s decision applies retroactively to tariffs imposed earlier this year on Canada, Mexico, and China, including those linked to fentanyl import controls and border security. However, tariffs enacted under Section 232 of the Trade Expansion Act of 1962—such as the 25% duties on steel and aluminum imports—remain unaffected.
The ruling specifically invalidated all tariffs introduced since January under IEEPA, ordering the administration to rescind them within 10 days.
White House Reaction and Legal Response
The Trump administration responded immediately by filing a notice of appeal and questioning the court’s jurisdiction. White House spokesperson Kush Desai defended the tariffs as necessary to address what the administration calls a “national emergency” caused by U.S. trade deficits that have “devastated American communities and weakened our defense industrial base.” Desai criticized the judiciary’s intervention, stating, “It is not for unelected judges to determine how to appropriately address a national emergency”.
Stephen Miller, deputy chief of staff for policy, condemned the ruling as a “judicial coup,” underscoring the administration’s frustration6. The Justice Department, led by a Trump appointee, argued that only Congress—not private businesses—can challenge the president’s emergency declarations under IEEPA.
Economists and legal experts expect the administration to pursue an emergency appeal to the U.S. Supreme Court, potentially seeking to keep the tariffs in place while the case proceeds through the appeals process.
Impact on Trade Policy and Economy
The court’s decision strikes at the heart of Trump’s trade strategy, which relies heavily on tariffs to pressure trading partners into renegotiating agreements and to reduce the U.S. goods trade deficit, which stands at approximately $1.2 trillion. Trump has repeatedly asserted that tariffs would revive American manufacturing jobs and generate substantial federal revenue, partially funding his tax cuts and budget plans.
If upheld, the ruling could severely undermine the administration’s leverage in trade negotiations with China, the European Union, and other key partners. It also introduces uncertainty for American businesses and consumers, who often bear the cost of tariffs through higher prices.
Financial markets reacted positively to the ruling. The U.S. dollar strengthened against the euro, yen, and Swiss franc. European indices such as Germany’s DAX rose by 0.9%, and the FTSE 100 gained 0.1%. Asian stock markets also saw gains, while Brent crude oil prices increased by 81 cents to $65.71 a barrel.
What Tariffs Are Affected and What Remains
| Tariff Type | Status After Court Ruling | Notes |
|---|---|---|
| Blanket 10% tariff on most imports | Blocked and must be rescinded | Imposed April 2, 2025 (“Liberation Day”) |
| Reciprocal tariffs on China, Canada, Mexico | Blocked and must be rescinded | Linked to trade deficits and fentanyl crisis |
| Sector-specific tariffs (steel, aluminum, autos) | Remain in effect | Imposed under Section 232 authority |
This distinction means that while the broad tariffs are halted, Trump’s earlier tariffs on steel and aluminum imports remain intact, preserving some trade protection for those industries.
Potential Workarounds and Future Outlook
Despite the setback, experts believe the Trump administration has several options to maintain pressure on trade partners. Economists at Goldman Sachs noted that the ruling, while a blow, might be temporary as the administration could seek alternative legal avenues to impose tariffs or modify existing ones.
The administration’s appeal to the Supreme Court could result in a stay that allows tariffs to remain in place during litigation. Moreover, the White House has indicated it will continue to use all available executive powers to address trade deficits and protect American industries.
Legal Challenges and Broader Context
This ruling is part of a growing legal pushback against Trump’s expansive trade policies. The case originated from a lawsuit filed by the nonpartisan Liberty Center on behalf of five small American businesses importing goods from affected countries. At least seven lawsuits have challenged various aspects of Trump’s tariffs to date, including one brought by a coalition of 13 U.S. states.
The court emphasized that its decision did not assess the wisdom or effectiveness of the tariffs, but focused strictly on the legal limits of presidential power under federal law.
The U.S. Court of International Trade’s ruling blocking most of President Trump’s sweeping tariffs marks a significant legal and political challenge to his trade agenda. While the administration has vowed to appeal and pursue alternative strategies, the decision underscores constitutional limits on executive power in trade policy and injects uncertainty into ongoing trade relations and economic planning. Markets have reacted positively to the ruling, but the ultimate outcome will depend on the appeals process and potential Supreme Court intervention.
