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3471A federal trade court just shut down President Donald Trump’s ambitious plan to slap massive tariffs on imports from nearly every country, saying he went too far.
The U.S. Court of International Trade ruled that Trump overstepped his authority by using a 1977 emergency law to justify broad new tariffs.
The decision blocks both the sweeping April tariffs and earlier duties on China, Mexico and Canada, dealing a major blow to the core of Trump’s economic agenda.
Court: Only Congress Can Set Tariffs
The three-judge panel said Trump’s use of the International Emergency Economic Powers Act (IEEPA) didn’t give him the power to unilaterally impose tariffs.
The court emphasized that the Constitution clearly gives Congress the authority to regulate trade.
“Executive overreach may finally have found its ceiling,” said Stephen Innes of SPI Asset Management.
“The Oval Office isn’t a trading desk, and the Constitution isn’t a blank cheque.”
The case combined two lawsuits—one from five small businesses and another from 12 states—challenging Trump’s “Liberation Day” tariffs.
These included 10% baseline tariffs on nearly all imports, and reciprocal tariffs of up to 50% on countries with U.S. trade deficits.
Trump had claimed that decades of trade deficits and the flow of drugs and undocumented immigrants were national emergencies.
But the court disagreed. The ruling noted that the U.S. has run trade deficits for nearly 50 years and that these issues did not justify bypassing Congress.
Some Tariffs Still Stand
The court’s decision does not overturn tariffs on steel, aluminum, or autos.
Those were imposed under a different law that required a Commerce Department investigation.
White House Plans Appeal
President Trump also pushed back on criticism about the so-called “TACO trade” — short for “Trump Always Chickens Out.”
The phrase, popularized by a Financial Times columnist, describes Trump’s pattern of announcing steep tariffs, causing markets to dip, and then backing off, which sends markets rebounding.
When asked about the label during a press conference, Trump rejected it outright.
“You call that chickening out? It’s called negotiation,” he told CNBC, after labeling the question “nasty.”
He added that his shifting stance helped bring countries like the European Union to the table.
“After I did what I did, they said, ‘We’ll meet anytime you want,’” he said.
The White House reacted quickly, saying it would appeal the ruling.
“It is not for unelected judges to decide how to properly address a national emergency,” said Deputy Press Secretary Kush Desai.
“President Trump pledged to put America First, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness,” he added.
But others welcomed the court’s decision.
New York Attorney General Letitia James, one of the state officials who sued, said: “These tariffs are a massive tax hike on working families and American businesses that would have resulted in more inflation, economic damage to businesses of all sizes, and job losses across the country.”
Markets React Positively
The decision brought some relief to financial markets.
U.S. stock futures rose, and global markets saw gains as traders felt some of the uncertainty around trade policy lift.
Next Moves and Legal Fallout
The White House has 10 days to begin the process of rolling back the tariffs, though many are already paused.
If the administration loses on appeal, importers will be refunded the tariffs they paid, with interest.
John Leonard, a former official at U.S. Customs and Border Protection, told the BBC there won’t be any immediate changes at the border, and that for now, importers will still need to pay the existing tariffs.
Wendy Cutler, a former trade official now with the Asia Society Policy Institute, said the ruling could shake up global trade talks.
“Partners negotiating hard during the 90-day tariff pause may be tempted to hold off making further concessions to the U.S. until there is more legal clarity,” she said.
Trump still has limited tariff power under the 1974 Trade Act, but that law caps tariffs at 15% for only 150 days.
Eswar Prasad, a trade policy professor at Cornell University, summed it up: “The ruling makes it clear that the broad tariffs imposed unilaterally by Trump represent an overreach of executive power.”
The legal fight isn’t over yet, but for now, the court has drawn a hard line on who really gets to set America’s trade rules.
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