Court Rules Trump's Tariff Policy Unconstitutional, Trade War in Jeopardy

In a significant development, the United States Court of International Trade has ruled that President Donald Trump's tariff policy, announced on April 2, is unconstitutional and exceeds his executive authority. The court's decision, made on May 28, has far-reaching implications for Trump's ongoing trade war, particularly his use of reciprocal tariffs as a negotiating tool.

The court, composed of judges appointed by Presidents Reagan, Obama, and Trump himself, unanimously decided that the president had abused his emergency powers and overstepped constitutional boundaries. The ruling stated that the president does not have unlimited authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977. The court emphasized that such broad powers would violate the separation of powers outlined in the Constitution.

The court's decision is based on two consolidated cases, V.O.S. Selections v. United States and Oregon v. Department of Homeland Security. The ruling highlighted four key points: the limited scope of presidential powers under IEEPA, the strict constraints on tariffs aimed at addressing trade deficits, the failure of the tariffs to address specific threats, and the requirement for nationwide uniformity in tariff implementation.

The court's ruling means that the reciprocal tariffs policy will be permanently enjoined unless a higher court intervenes within 10 calendar days. This decision does not affect other tariffs imposed by the Trump administration under different legal authorities, such as those on steel, aluminum, automobiles, and threatened tariffs on pharmaceuticals, semiconductors, and other critical products.

Following the ruling, the White House swiftly responded, vowing to use "every lever of executive power" to challenge the decision made by "unelected judges." The administration has already filed an appeal with the Federal Circuit Court of Appeals, which is the next step in the legal process. The case could ultimately be heard by the Supreme Court.

The court's decision has significant implications for Trump's trade negotiations. Since April, the administration has used the threat of reciprocal tariffs to push for trade agreements with approximately 18 countries. The ruling now puts this strategy in jeopardy, as the tariffs may be rendered ineffective within 10 days unless a higher court intervenes.

Trade representatives and legal experts have expressed concerns about the impact of this ruling on future trade negotiations. Jamie Greer, the U.S. Trade Representative, warned that an unfavorable court decision could hinder the government's efforts to negotiate trade agreements with other nations. Everett Eissenstat, a partner at a prominent law firm, noted that the ruling significantly affects the president's near-term agenda on tariffs and trade.

As the legal battle continues, the global trade landscape remains uncertain. The market will closely monitor the appeals process and any potential intervention by the Supreme Court. Until a higher court makes a final decision, the future of Trump's trade policies and their impact on international trade relations hangs in the balance.