A U.S. federal court has deemed President Donald Trump's 'Liberation Day' tariffs as illegal and blocked his plan to impose sweeping import tariffs under emergency powers, striking down a major element of his trade policy. In a ruling delivered on Wednesday, a three-judge panel at the Court of International Trade in Manhattan declared the executive orders issued on 2 April unlawful. These orders had introduced a 10% baseline tariff on most goods entering the U.S. and higher duties on imports from countries with large trade surpluses, such as China and the European Union.
The court said Trump’s use of the International Emergency Economic Powers Act (IEEPA) to justify the tariffs violated constitutional limits on presidential authority. The judges noted in their opinion, “An unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government.”
The decision represents a legal setback to Trump’s “Liberation Day” tariff push, which had aimed to reshape the U.S. trade landscape by unilaterally penalising import-heavy countries.
Asian stock markets and Wall Street futures rose on Thursday, buoyed by the court’s move to block the tariffs. The dollar gained ground against other major currencies, as investors turned to it as a safe-haven.
Despite this, the Indian rupee is likely to open weaker due to the dollar’s strength. The 1-month non-deliverable forward suggested the rupee would open in the 85.48–85.52 range, down from Wednesday’s close of 85.36.
“When you think about it, it’s a bit counterintuitive that Asia is lower on the back of the U.S. court blocking tariffs,” a Mumbai-based currency trader told Reuters. “However, that’s been the pattern — tariffs imply weaker U.S. growth and a softer dollar.”
Trump tariffs: Court rebukes overreach of emergency powers
The court emphasised that Congress holds the exclusive right to regulate commerce with foreign nations. The ruling rejected the argument that the president can impose tariffs under IEEPA unless there is a genuine and extraordinary emergency threat to national security.
“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 judges stated.
They added that Trump’s “Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President . . . to regulate importation by means of tariffs.”
Lawsuits from states and small businesses
The decision came in response to two lawsuits — one from the nonpartisan Liberty Justice Center representing five small U.S. businesses, and another from a group of 13 U.S. states led by Oregon. The businesses, including a wine importer from New York and an educational kit maker from Virginia, argued that the tariffs threatened their survival.
Oregon Attorney General Dan Rayfield, whose office spearheaded the states’ legal challenge, welcomed the court’s decision.
“This ruling reaffirms that our laws matter, and that trade decisions can't be made on the president's whim,” Rayfield said.
Jeffrey Schwab, a lawyer representing the businesses, accused Trump of an “unprecedented and unlawful expansion of executive authority” during the hearing.
White House pushes back
In response, the Trump administration filed an immediate notice of appeal. A White House spokesperson dismissed the ruling, arguing that courts should not interfere with executive actions during national emergencies.
“It is not for unelected judges to decide how to properly address a national emergency,” the spokesperson said. “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.”
Stephen Miller, then White House deputy chief of staff, added on social media, “The judicial coup is out of control.”
Shaky legal ground, market shocks
Trump had cited the IEEPA to declare the U.S. trade deficit a national emergency. He also pointed to foreign practices such as non-reciprocal trade terms and wage suppression, linking them to national security threats. But the law, traditionally used to impose sanctions on hostile nations, had never been used in this way before.
At a hearing in Oregon, Justice Department lawyer Brett Shumate warned that blocking the tariffs “would completely kneecap the president.” But Judge Jane Restani responded, “The court cannot for political reasons allow the president to do something he’s not allowed to do by statute.”
Markets had reacted sharply to Trump’s tariff announcements. Financial turmoil followed the initial orders, with partial relief only coming after Trump delayed several of the steepest levies. A 90-day tariff reduction agreement was reached with China, and a delay was granted to the EU following a call with European Commission President Ursula von der Leyen.
“We had a very nice call . . . and I agreed to move [the date],” Trump told reporters at the time.
Despite those pauses, the tariffs had a ripple effect on U.S. businesses and trading relationships. Critics say the legal uncertainty surrounding the emergency justification only adds to the economic harm.
Constitutional guardrails
The ruling underscores that the president cannot act alone when it comes to trade. While IEEPA does permit emergency action, the court firmly ruled that this does not amount to an unchecked power to restructure the nation’s trade relationships through tariffs.
“Any interpretation of the IEEPA that delegates unlimited tariff authority is unconstitutional,” the judges concluded.
Though the administration insists the trade deficit represents a national emergency, the court found that the law must still be followed, and that constitutional limits on presidential power remain in force — even during economic crises.
(With inputs from agencies)
The court said Trump’s use of the International Emergency Economic Powers Act (IEEPA) to justify the tariffs violated constitutional limits on presidential authority. The judges noted in their opinion, “An unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government.”
The decision represents a legal setback to Trump’s “Liberation Day” tariff push, which had aimed to reshape the U.S. trade landscape by unilaterally penalising import-heavy countries.
Asian stock markets and Wall Street futures rose on Thursday, buoyed by the court’s move to block the tariffs. The dollar gained ground against other major currencies, as investors turned to it as a safe-haven.
Despite this, the Indian rupee is likely to open weaker due to the dollar’s strength. The 1-month non-deliverable forward suggested the rupee would open in the 85.48–85.52 range, down from Wednesday’s close of 85.36.
“When you think about it, it’s a bit counterintuitive that Asia is lower on the back of the U.S. court blocking tariffs,” a Mumbai-based currency trader told Reuters. “However, that’s been the pattern — tariffs imply weaker U.S. growth and a softer dollar.”
Trump tariffs: Court rebukes overreach of emergency powers
The court emphasised that Congress holds the exclusive right to regulate commerce with foreign nations. The ruling rejected the argument that the president can impose tariffs under IEEPA unless there is a genuine and extraordinary emergency threat to national security.
“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 judges stated.
They added that Trump’s “Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President . . . to regulate importation by means of tariffs.”
Lawsuits from states and small businesses
The decision came in response to two lawsuits — one from the nonpartisan Liberty Justice Center representing five small U.S. businesses, and another from a group of 13 U.S. states led by Oregon. The businesses, including a wine importer from New York and an educational kit maker from Virginia, argued that the tariffs threatened their survival.
Oregon Attorney General Dan Rayfield, whose office spearheaded the states’ legal challenge, welcomed the court’s decision.
“This ruling reaffirms that our laws matter, and that trade decisions can't be made on the president's whim,” Rayfield said.
Jeffrey Schwab, a lawyer representing the businesses, accused Trump of an “unprecedented and unlawful expansion of executive authority” during the hearing.
White House pushes back
In response, the Trump administration filed an immediate notice of appeal. A White House spokesperson dismissed the ruling, arguing that courts should not interfere with executive actions during national emergencies.
“It is not for unelected judges to decide how to properly address a national emergency,” the spokesperson said. “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.”
Stephen Miller, then White House deputy chief of staff, added on social media, “The judicial coup is out of control.”
Shaky legal ground, market shocks
Trump had cited the IEEPA to declare the U.S. trade deficit a national emergency. He also pointed to foreign practices such as non-reciprocal trade terms and wage suppression, linking them to national security threats. But the law, traditionally used to impose sanctions on hostile nations, had never been used in this way before.
At a hearing in Oregon, Justice Department lawyer Brett Shumate warned that blocking the tariffs “would completely kneecap the president.” But Judge Jane Restani responded, “The court cannot for political reasons allow the president to do something he’s not allowed to do by statute.”
Markets had reacted sharply to Trump’s tariff announcements. Financial turmoil followed the initial orders, with partial relief only coming after Trump delayed several of the steepest levies. A 90-day tariff reduction agreement was reached with China, and a delay was granted to the EU following a call with European Commission President Ursula von der Leyen.
“We had a very nice call . . . and I agreed to move [the date],” Trump told reporters at the time.
Despite those pauses, the tariffs had a ripple effect on U.S. businesses and trading relationships. Critics say the legal uncertainty surrounding the emergency justification only adds to the economic harm.
Constitutional guardrails
The ruling underscores that the president cannot act alone when it comes to trade. While IEEPA does permit emergency action, the court firmly ruled that this does not amount to an unchecked power to restructure the nation’s trade relationships through tariffs.
“Any interpretation of the IEEPA that delegates unlimited tariff authority is unconstitutional,” the judges concluded.
Though the administration insists the trade deficit represents a national emergency, the court found that the law must still be followed, and that constitutional limits on presidential power remain in force — even during economic crises.
(With inputs from agencies)
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