A startling decision Wednesday from the United States Court of International Trade appeared to put at least a temporary pause on many of President Trump’s wide-ranging tariffs.
The Manhattan-based trade court ruled in an opinion issued by a three-judge panel that a key 1977 law called the International Emergency Economic Powers Act (IEEPA) does not give Trump “unbounded” authority to issue the worldwide and retaliatory tariffs the president has imposed by executive order in recent months.
Many of the president’s actions “exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs,” read the decision, which blocked imposition of some of Trump’ tariffs and invalidated the president’s orders.
The ruling applies to a series of controversial actions that Trump has taken to impose tariffs on entire nations since taking office. The ruling is not expected to impact other actions he has taken focused on specific goods from automobiles to steel — which rely on a different legal authority.
The White House immediately reacted to the news, with spokesman Kush Desai saying in a statement that “it is not for unelected judges to decide how to properly address a national emergency.”
Late Wednesday, the administration filed a notice with the court stating that it planned to appeal the decision.
President Donald Trump speaks during a swearing in the Oval Office of the White House on May 28. (Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
Meanwhile, some of those who brought the cases celebrated. A law professor who helped bring the suit wrote a reaction online that suggested the legal wrangling will continue but said: “The bottom line is a major victory in the legal battle against these harmful and illegal tariffs.”
The tariff orders were challenged by a New York liquor importer and several other American small businesses, as well as 11 state attorneys general.
With the Trump administration’s plan to appeal, the matter will likely head to the US Court of Appeals for the Federal Circuit, which has jurisdiction over international trade law disputes. The case could eventually reach the Supreme Court.
The decision’s focus on IEEPA immediately throws into doubt some of the most far-reaching of Trump’s tariff actions since taking office. Most notably, those include his “Liberation Day” tariffs of 10% on nearly the entire world, as well as the current threat of higher tariffs on countries that fail to reach a deal during his 90-day pause.
The president has also relied on IEEPA to impose duties on nations such as Mexico, Canada, and China, claiming that the nations’ failure to curb the flow of illegal drugs and migration into the US threatened US national security.
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The law was also the authority Trump planned to use when threatening, before deferring, on possible tariffs on Colombia.
The White House doubled down on its national security claim on Wednesday evening.
“Foreign countries’ nonreciprocal treatment of the Unites States has fueled America’s historic and persistent trade deficits,” said Desai, the White House spokesman. “These deficits have created a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base – facts that the court did not dispute.”
Duties based on other laws like those Trump has imposed on certain aluminum and steel products are not included in the court’s decision.
Recent duties on automobiles imposed by the president use so-called Section 232 tariff authority derived from a separate law called the Trade Expansion Act of 1962.
The tariffs on steel and aluminum also rely on Section 232.
Other sector-specific tariffs from Trump’s first term — and from President Biden’s time in office — also often relied on another tariff authority derived from Section 301 of the Trade Act of 1974.
The ruling was immediately celebrated by some of Trump’s critics in Washington. Senator Ron Wyden of Oregon said in a statement that he “argued from the start that Donald Trump’s claim that he could simply decree sky-high new taxes on imported goods depended on mangling the Constitution beyond recognition.”
Oregon was one of the states that brought suit against the Trump administration.
“I have no doubt the legal wrangling will continue, but I’m committed to retaking Congress’s authority over trade for good and shutting down Trump’s ability to unilaterally declare trade war with the world,” Wyden said.
The International Emergency Economic Powers Act of 1977 (IEEPA) says that during a national emergency, the president, in order to respond to an “unusual and extraordinary threat” from abroad, can regulate economic transactions, including imports.
Congress passed the IEEPA to restrict presidents from overstepping a 1917 World War I-era law known as the Trading With the Enemy Act (TWEA). The act, which regulates US transactions with enemy powers, allowed the president to exercise broad economic power during wartime and during national emergencies.
In this case, the trade court ruled that because the Constitution expressly allocates tariff power to Congress, IEEPA does not delegate “unbounded” tariff authority to the President. Instead, IEEPA’s provisions impose “meaningful limits” on the authority that IEEPA confers, the panel said.
The court also said the president’s tariffs fell short of meeting the IEEPA’s requirements because the duties do not address “an unusual and extraordinary threat” to national security.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed. Ben Werschkul is a Washington correspondent for Yahoo Finance.
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