Federal Court Blocks Trump Tariffs Citing Excess Authority

President Donald Trump's tariff policies faced a significant setback with a federal court ruling that challenged his authority to impose sweeping tariffs on imports. The U.S. Court of International Trade ruled that Trump exceeded his authority under the 1977 International Emergency Economic Powers Act (IEEPA) when he declared a national emergency to justify the tariffs. The court stated that the tariffs did not effectively address the supposed emergency and that the longstanding trade deficits did not constitute an urgent crisis.

Trump reacted strongly to the ruling, calling it "so wrong, and so political" on his Truth Social platform. He expressed hope that the Supreme Court would reverse the decision quickly and decisively. The Court of Appeals for the Federal Circuit allowed the president to temporarily continue collecting the tariffs while he appeals the trade court’s decision. This procedural step was seen as a mere formality by Jeffrey Schwab, senior counsel at the nonprofit Liberty Justice Center, who represented the five small businesses that sued the administration.

The legal challenge to Trump's tariffs is part of a broader effort to curb his trade policies, which have been criticized for rocking financial markets, paralyzing businesses with uncertainty, and raising fears of higher prices and slower economic growth. The court's decision blocks the tariffs Trump imposed last month on almost all U.S. trading partners, as well as earlier levies on China, Mexico, and Canada. These tariffs were justified under IEEPA, which Trump invoked to claim extraordinary power to act without congressional approval.

The ruling has significant implications for Trump's trade agenda. Wendy Cutler, a former U.S. trade official, described the decision as throwing the president's trade policy into turmoil. Other countries may be reluctant to make concessions during Trump's 90-day pause if there is a chance the courts will uphold the decision striking down the IEEPA tariffs. Companies will also have to reassess their supply chains, potentially speeding up shipments to the United States to offset the risk that the tariffs will be reinstated on appeal.

Despite the setback, Trump still has other avenues to pursue his trade goals. He can raise or impose new tariffs under Section 232 of the Trade Expansion Act of 1962, which requires a Commerce Department investigation and cannot be imposed at the president's discretion. Additionally, the court left in place tariffs on foreign steel, aluminum, and autos, as well as those imposed on China during Trump's first term, which were kept by President Joe Biden. Trump also retains the authority to impose tariffs to address trade deficits under the Trade Act of 1974, although this law restricts tariffs to 15% and to just 150 days.

The economic and financial fallout from the decision remains uncertain. Economists have suggested that without the IEEPA tariffs, the U.S. economy could grow faster in the second half of 2025, with prices rising more slowly. Importers may also get relief, as lawyer Peter Harrell noted that if the trade court’s decision is upheld, importers should eventually be able to get a refund of tariffs paid to date. However, the government is likely to seek to avoid paying refunds until appeals are exhausted.

The legal battle over Trump's tariffs is far from over. The U.S. Court of International Trade has jurisdiction over civil cases involving trade, and the legal challenge is widely expected to end up at the U.S. Supreme Court. The administration has other ways to pursue the president’s goal of using tariffs to lure factories back to America, raise money for the U.S. Treasury, and pressure other countries into bending to his will. However, the court's ruling serves as a significant check on Trump's authority and highlights the limits of presidential power in the realm of trade policy.