A significant legal blow was dealt to President Donald Trump on Wednesday as a federal court in New York prohibited his contentious plan to impose steep taxes on imports from nearly all nations. This decision by the US Court of International Trade cameas a response to Trump’s attempt to leverage the 1977 International Emergency Economic Powers Act (IEEPA) to declare a national emergency and justify sweeping tariffs, which disrupted traditional US trade policy, disturbed global markets, and heightened concerns over inflation and potential economic downturns globally.
This court has specific authority over civil trade cases, and its rulings can be challenged in the US Court of Appeals for the Federal Circuit and eventually the Supreme Court, where the ongoing legal battles surrounding Trump’s tariffs are likely to escalate.
What Tariffs Were Blocked?
The court’s recent ruling effectively halts the tariffs Trump imposed on virtually all US trading partners, as well as previous levies targeting China, Mexico, and Canada.
On April 2, Trump introduced reciprocal tariffs, reaching as high as 50% on nations with which the US runs a trade deficit, alongside a general 10% tariff on most imports. Although he paused the reciprocal tariffs for 90 days to negotiate reduced barriers to US exports, the standard tariffs remained in effect.
Trump’s justification for these significant tariffs was based on claiming extraordinary powers to act without congressional consent, dubbing the long-standing trade deficits as a “national emergency.” Earlier in February, he had used the IEEPA to impose tariffs on Canada, Mexico, and China by declaring an emergency caused by the illegal movement of immigrants and drugs across the US border, insisting these nations needed to take more action.
The Constitution assigns Congress the power to establish taxes, including tariffs, though over time, presidents have gained increasing control over such decisions—something Trump has capitalized on immensely.
Currently, these tariffs are contested in at least seven lawsuits, with the trade court merging two distinct cases—one initiated by five small businesses and another by twelve US states.
However, the ruling does not negate other tariffs put in place by Trump, such as those on foreign steel, aluminum, and automotive imports, as those were enacted under different statutes requiring regulatory investigations rather than unilateral presidential discretion.
Why Did the Court Rule Against Trump?
The Trump administration referenced historical precedents, claiming that courts had approved President Nixon’s emergency tariff actions during a financial crisis in 1971 when the dollar was devalued. Nixon relied on the 1917 Trading With Enemy Act, which provided legal grounding for using emergency powers similar to those in IEEPA.
Yet, the court found that Trump’s expansive tariffs overstepped his authority under IEEPA, pointing out that these tariffs did not effectively address the issues they were intended to resolve. The states involved noted that America’s trade deficits, which have persisted for 49 consecutive years, hardly constitute an immediate emergency.
What’s Next for Trump’s Trade Agenda?
Wendy Cutler, a former US trade official and current vice president at the Asia Society Policy Institute, stated that this ruling “throws the president’s trade policy into disarray.” She explained that trade partners may be hesitant to make further concessions during the 90-day tariff suspension period, waiting for greater legal clarity.
Companies will also likely reassess their supply chain strategies, potentially advancing shipments to the United States to mitigate the risk of reinstated tariffs pending appeal.
The trade court did note that Trump retains limited authority to impose tariffs addressing trade deficits under another law, the Trade Act of 1974. However, this law caps tariffs at 15% and limits their duration to 150 days for countries with significant trade deficits.
In summary, the trade court’s ruling undermines the Trump administration’s justification for invoking federal emergency powers to impose such tariffs, suggesting an overstep of congressional authority and dismissing the due process considerations. Professor Eswar Prasad, a trade policy expert at Cornell University, expressed that the decision emphasizes the excessive nature of Trump’s unilateral tariffs.
Photo credit & article inspired by: Euronews
