Court Rules Trump Overstepped Authority on Tariffs

US President Donald Trump holds up a signed executive order after addressing reciprocal tariffs during a “Make America Wealthy Again” event in the White House Rose Garden, Washington, DC, on April 2, 2025.

A US federal trade court has ruled that former President Donald Trump exceeded his constitutional authority by imposing sweeping tariffs on imports from multiple countries, blocking those duties from taking effect.

In a significant decision, the court found that the power to regulate international commerce lies solely with Congress and cannot be overridden by the president through emergency economic powers.

"The court does not assess whether the tariffs were wise or effective," a panel of three judges noted. "They are impermissible because the law does not permit such actions."

The ruling issued a permanent injunction against tariffs implemented since January under the International Emergency Economic Powers Act (IEEPA), a law historically used to respond to extraordinary threats such as sanctions against hostile nations. The administration was ordered to issue new directives in line with the ruling within 10 days. An appeal was filed shortly after the decision was announced.

The judgment does not apply to specific tariffs on goods like steel, aluminum, or automobiles, which were imposed under different legal provisions.

The court’s decision, which takes immediate effect, casts uncertainty over several active trade negotiations and challenges a key tool of the former president’s trade strategy.

Tariffs had become central to Trump’s approach, aimed at pressuring trade partners and reducing the US goods trade deficit. However, sudden changes in policy left many businesses struggling to manage supply chains, pricing, and staffing.

A spokesperson for the administration defended the tariff policy, stating that trade deficits had caused economic harm and weakened the industrial base. The statement claimed that addressing such emergencies should not fall under the discretion of unelected judges.

Financial markets responded positively to the court’s ruling, with the US dollar strengthening against major currencies and equity markets in both the US and Asia showing gains.

Legal and Economic Impact

The case was brought through two lawsuits — one by a group of small US businesses that rely on imported goods, and another by a coalition of 12 states. The affected companies include importers of wine, educational kits, and musical instruments, all of whom argued that the tariffs threatened their viability.

The court emphasised that the ruling applies broadly, not just to the plaintiffs. “If the tariff orders are unlawful for these parties, they are unlawful for all,” the judges wrote.

The Attorney General of Oregon, representing the coalition of states, described the tariffs as unlawful and economically harmful. He welcomed the decision as a reaffirmation that major trade actions must follow the law, not presidential discretion.

Trump had argued that he held broad powers under IEEPA to impose tariffs in response to trade deficits, which he declared a national emergency. This marked the first time a US president used the act in this way.

The administration had previously argued that the lawsuits should be dismissed, claiming no harm had been suffered yet and that only Congress could challenge a national emergency declaration.

Although the administration paused some of the harsher tariffs within a week of their introduction, and announced temporary reductions on Chinese goods in May, the overall strategy relied heavily on tariff threats.

At least five additional legal challenges related to the tariffs remain ongoing.