A US trade court has just dropped a bombshell on Donald Trump’s sweeping tariff regime, declaring it illegal—a stunning decision that could derail the former president’s hard-hitting global trade strategy.
In a sharp rebuke, a three-judge panel from the New York-based Court of International Trade sided with lawsuits arguing that Trump overstepped his legal authority, turning America’s trade policy into a chaotic tool dictated by his personal agenda.
Typically, tariffs require Congressional approval. But Trump sidestepped Congress, arguing that the country’s trade deficit posed a national emergency—a move that allowed him to slap massive tariffs on nations around the globe in a move that shocked markets and rattled economies.
But the court wasn’t having it. Their ruling was blunt: Trump’s tariff orders “exceed any authority granted to the president … to regulate importation by means of tariffs.”
The judges made it clear they weren’t questioning the effectiveness or strategy behind using tariffs as leverage. Instead, their decision zeroed in on legality. Their message? These tariffs are unlawful “not because they are unwise or ineffective, but because [federal law] does not allow it.”
Financial markets responded instantly. The US dollar surged, gaining strength against the euro, yen, and Swiss franc. Over in Europe, Germany’s DAX jumped 0.9%, France’s CAC 40 climbed, and the UK’s FTSE 100 edged up. In Asia, stocks soared, and US futures pointed to a bullish open on Wall Street.
The ruling immediately nullifies all tariffs enacted under the International Emergency Economic Powers Act (IEEPA)—a law designed for “unusual and extraordinary” threats during true national crises.
The judges ordered Trump to issue new orders that reflect this permanent injunction within 10 days.
However, the Trump administration isn’t backing down. It has already filed an appeal, and the White House slammed the court’s authority. “It is not for unelected judges to decide how to properly address a national emergency,” said Kush Desai, a White House spokesperson, in a statement to Reuters.
If upheld, the ruling would blow a massive hole in Trump’s trade playbook—one that used high tariffs to squeeze trading partners, bring manufacturing jobs back to the US, and reduce the $1.2 trillion goods trade deficit, a central pillar of his campaign.
Without the IEEPA, Trump’s team would have to pivot to slower, more traditional methods—launching lengthy investigations and complying with existing trade laws—to justify new tariffs.
Any appeal will now head to the US Court of Appeals for the Federal Circuit in Washington, DC, and could ultimately land in the US Supreme Court.
Notably, the court wasn’t asked to weigh in on other industry-specific tariffs—like those on automobiles, steel, and aluminium—that were enacted under a different law. So for now, those tariffs stay in place.
Analysts at Goldman Sachs warned that while the ruling shakes things up, it may not kill Trump’s tariff ambitions altogether. “This ruling is a setback and adds uncertainty,” they said, “but it may not change the final outcome for many key US trading partners.”
Meanwhile, Stephen Miller, Trump’s former deputy chief of staff, blasted the decision in a fiery social media post, calling it proof that “the judicial coup is out of control.”
Trump himself stayed silent on Truth Social about the ruling. Instead, he touted a legal win in a separate case—his lawsuit against the Pulitzer board, which hands out America’s top journalism awards.
So far, at least seven lawsuits have challenged Trump’s border taxes—the cornerstone of his trade policy.
This ruling came from two such lawsuits. One was brought by a group of small businesses, including VOS Selections, a wine importer whose owner warned that the tariffs were crushing his business. The other case was led by twelve US states, spearheaded by Oregon.
“This decision confirms that our laws still matter,” said Oregon Attorney General Dan Rayfield. “Trade policy can’t be dictated by a president’s whims.”
Plaintiffs in the lawsuits argued that the emergency powers law doesn’t give the president the right to impose tariffs—and even if it did, a trade deficit doesn’t qualify as the type of “unusual and extraordinary threat” that would justify such drastic action. After all, the US has run a trade deficit for 49 consecutive years.
Trump’s global tariff blitz aimed to reverse those long-standing imbalances, targeting not only China and Mexico, but even close allies like Canada—citing concerns ranging from illegal immigration to the flow of synthetic opioids across the border.
Trump’s team pointed to a historical example: Richard Nixon’s emergency tariffs in 1971, and argued that only Congress, not the courts, should determine whether a president’s rationale for declaring an emergency holds up.
Still, Trump’s “Liberation Day” tariffs shook the global economy, with many economists cutting their US growth forecasts. Yet so far, the actual economic pain from the tariffs hasn’t reached consumers.
Description:
A U.S. trade court has declared Donald Trump's global tariff strategy illegal, dealing a major blow to his trade policy. Learn how the ruling impacts international trade, financial markets, and the future of U.S. tariffs under emergency powers.