Court Invalidates Trump Tariffs 10% Baseline Rate on All Nations

The US Court of International Trade delivered a significant setback to President Donald Trump’s trade policy on Wednesday by invalidating his extensive tariff regime implemented in April. A three-judge panel ruled that Trump exceeded his presidential authority when imposing blanket tariffs on most US trading partners under the International Emergency Economic Powers Act (IEEPA).

The court emphasized that the IEEPA imposes “meaningful limits” on presidential authority. “Any interpretation that delegates unlimited tariff authority is unconstitutional,” the panel stated in their decision. This ruling invalidates the 10% baseline tariff applied to all nations, along with higher rates imposed on specific countries, including the 25% levy on Canada and Mexico and the 20% rate on Chinese imports.

The court’s decision came in response to two lawsuits. One was filed by small businesses, including wine importer V.O.S. Selections. The other was brought by a coalition of states led by Oregon and Arizona. The ruling covers all tariffs collected since April 2, potentially requiring refunds totaling around $10 billion based on 2024 US import levels. China alone could receive approximately $3.5 billion in refunds.

The court ordered the US government to issue the necessary administrative actions “within 10 calendar days” to implement the permanent injunction. However, Trump’s legal team has already filed a notice of appeal to the US Court of Appeals for the Federal Circuit.

Veteran economist Peter Schiff, who had previously called Trump’s tariffs “illegal,” reiterated his position following the ruling. “The power to tax lies with Congress, not one man, and tariffs must originate in the House,” Schiff wrote. Former BitMEX CEO Arthur Hayes viewed the decision as a market opportunity, suggesting it was time to “buy everything.” Hayes hinted at a major rally ahead in the markets, calling this the “second round” of buying opportunities.

Kadan Stadelmann, CTO of Komodo Platform, noted that while Bitcoin experienced a short-term decline as investors shifted to equities, he doesn’t expect this to reverse the broader crypto bull market. Despite the positive market reaction to the tariff ruling, the 10-year Treasury note yield climbed above 4.50% shortly after the announcement. This suggests broader economic factors continue to influence fixed-income markets, regardless of trade policy shifts.

The Federal Reserve had been taking a “cautious approach” while waiting for clarity on the trade tariff matter. The central bank had postponed interest rate cuts, citing uncertainty around trade policies as a factor in their decision-making. The ruling represents a setback for Trump’s second-term trade doctrine, which had sought to use tariffs as leverage in international negotiations. The administration justified the tariffs by claiming an economic emergency tied to drug trafficking and foreign coercion.

As the legal battle continues through the appeals process, uncertainty in trade policy is likely to persist in the coming months, keeping markets on edge despite the initial positive reaction.