US court blocks Trump's 'Liberation Day' tariffs, cites overreach of authority

UPDATED: May 29, 2025 05:47 IST

A US trade court on Wednesday blocked President Donald Trump’s sweeping “Liberation Day” tariffs, ruling that he exceeded his legal authority by imposing across-the-board import duties without congressional approval.

The decision, issued by a three-judge panel at the Court of Trade in Manhattan, emphasized that the Constitution grants Congress exclusive power to regulate international commerce, a power not overridden by the president’s emergency authorities.

The tariffs, announced in April, included a 10 per cent baseline duty on all imports, with steeper rates for countries running large trade surpluses with the US, such as China.

Trump justified the move under the Emergency Economic Powers Act (IEEPA), citing the trade deficit as a national emergency. However, the court found that the law does not permit the use of tariffs for economic leverage in this manner.

"The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it," the three-judge panel was quoted as saying by news agency Reuters.

The ruling came in response to lawsuits filed by five small US import businesses and a coalition of 13 states led by Oregon Attorney General Dan Rayfield, who called the tariffs "unlawful, reckless, and economically devastating."

The Department of Justice had argued for dismissal, claiming plaintiffs had not yet suffered harm and lacked standing. However, the court disagreed, opening the door for continued legal scrutiny.

Markets responded positively, with the US dollar strengthening against safe-haven currencies like the Swiss franc and Japanese yen.

The decision may be appealed to the Federal Circuit Court in Washington, DC, and possibly the Supreme Court.

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