A federal court on Wednesday struck down a major pillar of President Donald Trump’s trade agenda, ruling that his use of emergency powers to impose broad tariffs on imports exceeded the authority granted by law.
The decision immediately cast uncertainty over Trump’s aggressive tariff strategy, which has shaken global markets, strained U.S. trade relations, and fueled inflation concerns.
The three-judge panel of the U.S. Court of International Trade in New York found that Trump’s so-called “Liberation Day” tariffs violated the limits of the 1977 International Emergency Economic Powers Act (IEEPA).
The court ruled that the statute does not authorize the president to impose tariffs as a tool of economic regulation in the absence of a genuine emergency.
“The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs,” the court stated.
The panel included Judges Timothy Reif (appointed by Trump), Jane Restani (a Reagan appointee), and Gary Katzmann (appointed by Obama).
While the ruling leaves intact tariffs imposed under a separate law Section 232 of the Trade Expansion Act of 1962, which Trump used to levy duties on foreign steel, aluminum, and autos—it invalidates a key legal foundation for Trump’s newer and more sweeping tariff actions.
The lawsuit, brought by small businesses and joined by a coalition of a dozen states led by Oregon, challenged Trump’s claim that longstanding trade deficits amount to a national emergency.
Plaintiffs argued that the emergency powers law was not intended to give the president unilateral control over trade policy—especially not in response to conditions that have persisted for decades.
Oregon Attorney General Dan Rayfield hailed the decision, saying it “reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim.”
Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, added that the tariffs “jacked up prices on groceries and cars, threatened shortages of essential goods, and wrecked supply chains.”
White House spokesperson Kush Desai pushed back, saying trade deficits represent a crisis that has “decimated American communities and weakened our defense industrial base.”
“He emphasized that the administration is “committed to using every lever of executive power to restore American greatness.”
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The Trump administration immediately filed a notice of appeal, signaling that the legal battle could ultimately reach the Supreme Court.
While the court ruled that Trump cannot continue using emergency powers under IEEPA to impose tariffs without congressional involvement, it acknowledged the president still retains the authority under Section 122 of the Trade Act of 1974 to impose temporary tariffs of up to 15% for 150 days on countries with which the U.S. has significant trade deficits.
Trump has used tariffs as a central instrument of foreign policy, arguing they would revive American manufacturing, reduce the federal deficit, and force other countries into favorable trade deals. Critics, however, say they have caused economic harm while achieving few long-term benefits.
The now-blocked tariffs, part of Trump’s second-term “America First” economic strategy, had also targeted imports from China, Mexico, and Canada under the justification of curbing illegal immigration and the opioid trade.
Among the plaintiffs was V.O.S. Selections, a small wine importer whose owner warned the tariffs could drive his business to collapse.
Although the court decision won’t immediately undo all of Trump’s trade actions, it delivers a significant blow to his effort to unilaterally reshape global commerce — and marks a sharp legal rebuke of one of his administration’s most controversial tools.
