Federal Court Blocks Trump’s Tariffs, White House Disputes Judges’ Authority Over National Emergency

The Manhattan-based Court of International Trade blocked President Donald Trump’s “Liberation Day” tariffs on 28 May 2025.

The federal court ruled Trump overstepped his authority, by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.

Trump Exceeded Constitutional Powers on Trade Tariffs

A three-judge panel stated the US Constitution gives Congress exclusive authority to regulate commerce with other countries. This authority is not overridden by presidential emergency powers to safeguard the US economy.

“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 panel said in their decision.

The ruling addressed two separate lawsuits. The non-partisan Liberty Justice Centre filed one lawsuit on behalf of five small US businesses that import goods from countries targeted by the duties. Thirteen US states filed the other lawsuit.

The five companies range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments. These businesses stated the tariffs will hurt their ability to conduct business.

At least five other legal challenges to the tariffs remain pending in various courts.

Trump Administration’s Emergency Powers Argument Rejected

Trump claimed broad authority to set tariffs under the International Emergency Economic Powers Act (IEEPA). This law addresses “unusual and extraordinary” threats during a national emergency.

The law has historically imposed sanctions on enemies of the US or frozen their assets. Trump became the first US president to use IEEPA to impose tariffs.

The Justice Department argued the lawsuits should be dismissed. They claimed plaintiffs have not been harmed by tariffs they have not yet paid. The department also argued only Congress, not private businesses, can challenge a national emergency declared by the president under IEEPA.

Trump imposed the tariffs in early April 2025, calling the trade deficit a national emergency. This justified his 10 per cent across-the-board tariff on all imports, with higher rates for countries with which the US has the largest trade deficits, particularly China.

Many country-specific tariffs were paused one week later. The Trump administration on 12 May 2025 temporarily reduced the steepest tariffs on China while working on a longer-term trade deal. Both countries agreed to cut tariffs on each other for at least 90 days.

Legal and Political Reactions Follow Court Decision

Oregon Attorney General Dan Rayfield, a Democrat whose office leads the states’ lawsuit, called Trump’s tariffs unlawful, reckless and economically devastating.

“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the President’s whim,” Rayfield said in a statement.

After the court announced its ruling, the Trump administration immediately filed an appeal.

The White House stated that unelected judges have no authority to decide how to handle a national emergency.

Trump’s tariffs, which he said are intended to restore US manufacturing capability, have shocked US financial markets. The US dollar rose against both the Swiss franc, a traditional currency safe haven, and the Japanese yen following the court decision.

The 28 May 2025 decision can be appealed at the US Court of Appeals for the Federal Circuit in Washington, DC. The case could ultimately reach the US Supreme Court.

In separate White House developments, Elon Musk is leaving Donald Trump’s administration. A White House official confirmed his “off-boarding will begin tonight”.

The Tesla boss was seen as being very close to Donald Trump and was given the job of helping to cut government costs. On X, Musk thanked the president for the “opportunity to reduce wasteful spending”.