A US trade court has ruled Donald Trump’s sweeping tariffs regime illegal, in dramatic twist that could block the US president’s controversial global trade policy.
The ruling by a three-judge panel at the New York-based court of international trade came after several lawsuits argued that Trump had exceeded his authority, leaving US trade policy dependent on the president’s whims and unleashing economic chaos around the world.
Tariffs typically need to be approved by Congress but Trump has so far bypassed that requirement by claiming that the country’s trade deficits amounted to a national emergency.
It left the US president able to apply sweeping tariffs to most countries in the world last month, in a shock move that sent markets reeling.
The court’s ruling stated that Trump’s tariff orders “exceed any authority granted to the president … to regulate importation by means of tariffs”.
Judges were keen to state that they were not passing judgment on the “wisdom or likely effectiveness of the president’s use of tariffs as leverage.”
Instead, their ruling centred on whether the trade levies had been legally applied in the first place. Their use is “impermissible not because it is unwise or ineffective, but because [federal law] does not allow it,” the decision explained.
Financial markets cheered the court’s ruling, with the US dollar rallying in its wake, surging against the euro, yen and Swiss franc.
Stocks in Asia also climbed on Thursday, while US futures pointed to a jump in Wall Street-listed shares.
The Trump administration reportedly plans to appeal against the ruling, while White House officials have hit out at the court’s authority..“It is not for unelected judges to decide how to properly address a national emergency,” Kush Desai, a White House spokesperson, said in a statement to Reuters.
But the ruling, if it stands, blows a giant hole through Trump’s strategy to use steep tariffs to wring concessions from trading partners, draw manufacturing jobs back to US shores and shrink a $1.2tn (£892tn) US goods trade deficit, which were among his key campaign promises.
Without the help of the international emergency powers act (IEPPA), the Trump administration would have to take a slower approach, launching lengthier trade investigations and abiding by other trade laws to back the tariff threats.
Any legal challenge to the ruling will have to be heard atthe US court of appeals for the federal circuit in Washington DC, and ultimately the US supreme court.
The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminum, using a different statute, so these are likely to remain in place for now.
Stephen Miller, the White House deputy chief of staff for policy, hit out at the ruling with on media post claiming “the judicial coup is out of control”.
Trump did not immediately post a response on Truth Social. Instead, he posted about what he characterised as a favourable ruling in another lawsuit, in which he is suing the Pulitzer board, which awards America’s most prestigious journalism prizes.
At least seven lawsuits have challenged Trump’s border taxes, the centerpiece of Trump’s trade policy.
The tariffs lawsuit was filed by a group of small businesses, including a wine importer, VOS Selections, whose owner has said the tariffs are having a major impact and his company may not survive.
A dozen states also filed a suit, led by Oregon. “This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” Oregon attorney general Dan Rayfield said.
The plaintiffs in the tariff lawsuit argued that the emergency powers law does not give the president the power to apply tariffs, and even if it did, the trade deficit does qualify as an emergency, which is defined as an “unusual and extraordinary threat”.
The US has run a trade deficit with the rest of the world for 49 consecutive years.
Trump imposed tariffs on most countries around the world in an effort to reverse the US’s massive and longstanding trade deficits.
He also targeted imports from Canada, China and Mexico, claiming it was meant to combat the illegal flow of immigrants and the synthetic opioids across the US border.
His administration pointed to the court’s approval of the former president Richard Nixon’s emergency use of tariffs in 1971, and claimed that only Congress, and not the courts, could determine the “political” question of whether the president’s rationale for declaring an emergency complied with the law.
Trump’s “liberation day” tariffs shook global financial markets and led many economists to downgrade the outlook for US economic growth. So far, though, the impact of tariffs on the US economy has yet to be felt by consumers.
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