The Trump administration is racing to halt a major blow to the president’s sweeping tariffs after a US court ruled they “exceed any authority granted to the president”.
A US trade court ruled Donald Trump’s tariffs regime was illegal on Wednesday in a dramatic twist that could block the president’s controversial global trade policy.
On Thursday, an appeals court agreed to a temporary pause in the decision pending an appeal hearing. The Trump administration is expected to take the case to the supreme court if it loses.
The ruling by a three-judge panel at the New York-based court of international trade came after several lawsuits argued Trump had exceeded his authority, leaving US trade policy dependent on his whims and unleashing economic chaos around the world.
On Thursday, the Trump administration filed for “emergency relief” from the ruling “to avoid the irreparable national-security and economic harms at stake”.
The White House press secretary, Karoline Leavitt, said the judges had “brazenly abused their judicial power to usurp the authority of President Trump” in what she characterised as a pattern of judicial overreach.
“Ultimately the supreme court must put an end to this,” she said.
Leavitt’s comments came as a second judge, Washington DC district court judge Rudolph Contreras, called the tariffs “unlawful” and ordered a preliminary injunction on the collection of tariffs from a pair of Illinois toy importers, which brought the case.
Tariffs typically need to be approved by Congress but Trump has so far bypassed that requirement by claiming that the country’s trade deficits amount to a national emergency. This had left him able to apply sweeping tariffs to most countries 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”.
The 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 was “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, soaring against the euro, yen and Swiss franc. In Europe, the German Dax rallied 0.9%, while France’s Cac 40 rose 1%. The UK’s FTSE 100 blue-chip index ticked up 0.1% at the start of trading. Stocks in Asia also climbed on Thursday, while in the US stock markets all rose marginally.
The ruling immediately invalidated all of the tariff orders that were issued through the International Emergency Economic Powers Act (IEEPA), a law meant to address “unusual and extraordinary” threats during a national emergency.
The judges said Trump must issue new orders reflecting the permanent injunction within 10 days.
White House officials have hit out at the court’s authority.
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 (£892bn) US goods trade deficit, which were among his key campaign promises.
Without the help of the IEEPA, 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.
The decision is also likely to embolden other challenges to Trump’s policy. Last month, California’s governor, Gavin Newsom, filed a lawsuit against the tariffs, arguing they were “illegal, full stop”.
The court was not asked to address some industry-specific tariffs Trump has issued on cars, steel and aluminium, using a different statute, so these are likely to remain in place for now.
Analysts at Goldman Sachs said that there could be other legal avenues for Trump to impose across-the-board and country-specific tariffs, saying: “This ruling represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners.”
Other options for the president include sections under various trade acts that grant him powers to intervene on trade policy, albeit in an often slower and, in some instances, more limited way.
after newsletter promotion
Stephen Miller, the White House deputy chief of staff for policy, hit out at the ruling in a social media post that claimed “the judicial coup is out of control”.
After a relatively long – for him – period of silence on his social media platform, Trump resumed posting on Thursday, with a 500-word screed attacking the three judges who ruled against him.
Trump’s post began by noting that the order to unwind the tariffs had been paused temporarily by an appeals court, but then turned to baseless speculation that the three judges on the federal trade court must have been motivated by hatred for him.
“Where do these initial three Judges come from? How is it possible for them to have potentially done such damage to the United States of America? Is it purely a hatred of ‘TRUMP?’ What other reason could it be?” the president asked, without noting that he had appointed one of the judges himself in 2018.
Trump’s curiosity as to what could possibly explain the decision did not, apparently, extend to reading any of the 49-page explanation written by the court, because his post did not deal with any of the legal issues raised in the opinion.
At least seven lawsuits have challenged Trump’s border taxes, the centrepiece of Trump’s trade policy.
The court made its ruling in response to two cases. One was filed by a group of small businesses, including a wine importer, VOS Selections, whose owner said the tariffs were having a major impact and his company may not survive.
The other was filed by a dozen US states, led by Oregon.
“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” said the Oregon attorney general, Dan Rayfield.
The plaintiffs in the tariff lawsuit argued that the emergency powers law did not give the president the power to apply tariffs, and even if it had done, the trade deficit did not 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 also targeted imports from Canada, China and Mexico, claiming his decision 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 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.
Reuters and the Associated Press contributed reporting
