In a major legal blow to US president Donald Trump, a federal court has struck down his controversial 'liberation day' import tariffs, ruling that he exceeded the powers granted to him under federal law. The ruling from the US Court of International Trade in Manhattan held that president Trump’s sweeping tariffs violated the Constitution by infringing on Congress’s exclusive authority to regulate commerce with foreign nations.
The three-judge panel determined that president Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) to justify across-the-board tariffs on countries running trade surpluses with the US was an overreach. The IEEPA, enacted in 1977, grants the president broad economic powers during national emergencies, but the court ruled that it does not authorise the imposition of unilateral and indefinite tariffs that do not directly address an actual emergency.
On 2 April 2025, president Trump announced the tariffs, imposing a baseline 10% import duty, with higher rates targeted at countries like China and European Union (EU) member states. The administration claimed these actions were necessary to counteract economic threats posed by chronic trade imbalances and to restore fair trade.
The White House also argued in court that the tariffs served as a strategic tool to de-escalate tensions in South Asia, citing a ceasefire between India and Pakistan following a terrorist attack in Jammu and Kashmir’s Pahalgam on 22 April 2025.
However, both India and Pakistan downplayed any US role in easing the conflict, with New Delhi maintaining that the Trump administration had no involvement, and Islamabad urging India to halt military action independently. The court remained unconvinced by the administration’s rationale, stating that the president cannot assume 'unbounded' authority over trade policy by invoking emergency powers. The panel stressed that Congress had not delegated unlimited powers under the IEEPA and that using the law in this manner effectively bypassed the legislative branch.
The court wrote that “the Constitution gives Congress exclusive authority to regulate commerce with foreign nations. That authority is not displaced simply because the President invokes emergency powers.”
It added that allowing such unchecked delegation of power would amount to an improper transfer of legislative authority to the executive branch. The court further clarified that its ruling did not comment on the wisdom or effectiveness of tariffs as an economic tool, but solely on their legality under existing law.
The lawsuit, brought by the Liberty Justice Center on behalf of five small businesses, and joined by 13 US states, was the first major legal challenge to president Trump’s tariff regime. They argued that the tariffs would raise costs, damage operations and were imposed without legislative oversight. Several other legal challenges against Trump’s trade measures are still pending in courts across the country.
In addition to blocking the 'liberation day' tariffs, the court also struck down a separate set of levies imposed on China, Mexico and Canada. These were justified by the administration as measures to combat the flow of drugs and illegal immigration into the US.
But the judges found that the tariffs did not directly address the emergencies they purported to respond to, particularly in relation to fentanyl trafficking. Under IEEPA, the court explained, a president must act in direct response to an emergency threat — using tariffs merely to gain leverage in negotiations does not satisfy the law’s requirements.
The Trump administration reacted with immediate defiance, filing a notice of appeal and defending the tariffs as necessary to protect American interests. White House deputy chief of staff Stephen Miller called the ruling part of a 'judicial coup', while spokesman Kush Desai said it was not the role of 'unelected judges' to decide how to address national emergencies. Mr Desai added that president Trump had pledged to put 'America First' and would continue using executive powers to address economic threats.
Financial markets reacted positively to the decision. Stock markets in Asia rose sharply, with Japan’s Nikkei 225 gaining 1.5% and futures for US stock indices also posted gains. Investors appeared relieved at the removal of a major source of trade policy uncertainty which had rattled markets since the tariffs were announced.
Following initial backlash, the Trump administration had already paused or reduced some of the country-specific levies and on 12 May 2025 agreed with China to scale back the harshest measures for 90 days as both sides pursued a broader trade agreement. The White House had warned that the court’s intervention could derail those delicate negotiations, but the court dismissed that concern as irrelevant to the question of legality.
In a statement celebrating the ruling, New York attorney general Letitia James says, “These tariffs are a massive tax hike on working families and American businesses that would have led to more inflation, economic damage to businesses of all sizes, and job losses across the country if allowed to continue.”
Oregon attorney general Dan Rayfield called the decision “a victory not just for Oregon, but for working families, small businesses, and everyday Americans.”
The panel of judges—appointed by presidents Ronald Reagan, Barack Obama and Mr Trump himself—emphasised that presidential powers, even during emergencies, must have clearly defined limits under the Constitution. In rejecting Trump’s expansive interpretation of IEEPA, they have set a precedent likely to shape future administrations’ use of emergency powers in trade and beyond.
While the Trump administration pursues its appeal, the court’s ruling puts a firm judicial check on the president’s ability to unilaterally shape trade policy. With additional legal cases still in play, the scope of presidential authority under emergency economic laws remains a critical constitutional battleground.
