US Court Strikes Down Trump Tariffs: New Limits on Executive Power in Trade Policy

US Court Strikes Down Trump Tariffs: A New Era in International Trade Law

A landmark decision by the US Court of International Trade has sent shockwaves through global markets. On May 28, 2025, the court ruled that most of the import tariffs imposed by President Donald Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) of 1977. This verdict is not only a legal victory for international businesses but also marks a new limit on presidential powers over trade policy.

Background of Trump’s Tariff Policy

In early 2025, Trump introduced a sweeping set of import tariffs aimed at reducing the US trade deficit, which he claimed posed a threat to national economic security. Known as the “Liberation Day Tariffs,” these measures included a 10% tariff on almost all imports and even higher rates for products from countries like China, Mexico, and Canada. Trump invoked IEEPA as the legal basis, arguing that the trade deficit constituted an “extraordinary” threat to national security.

This approach quickly drew legal challenges from industry associations and major importers, who argued that the trade deficit could not be classified as an extraordinary threat under IEEPA standards. The court eventually agreed, finding that the president had overstepped constitutional boundaries, as Congress—not the executive—holds the power to regulate international trade.

The Court’s Ruling and Legal Grounds

In its decision, the Court of International Trade stated that the president’s use of IEEPA to justify broad import tariffs was unlawful. The court emphasized that the US Constitution gives Congress exclusive authority over international trade policy. Moreover, it found the argument that a trade deficit constitutes a national threat to be weak and not meeting the criteria set by IEEPA.

This ruling not only invalidates the tariffs but also sets a legal precedent that limits unilateral executive actions in future macroeconomic policy.

Economic Impact: Markets Respond Positively

News of the court’s decision was immediately welcomed by global markets. Major stock indices like the S&P 500 and Nasdaq surged, reflecting renewed investor optimism. Tech stocks, including Nvidia, posted significant gains, while crude oil and other commodities also saw price increases. Conversely, gold prices dropped as the perceived risk from trade uncertainty diminished.

US exporters, importers, and their global partners also praised the ruling, anticipating lower logistics costs and more efficient international trade as tariffs are lifted.

Trump Administration Response: Appeals and Controversy

The Trump administration swiftly rejected the court’s ruling. In an official statement, the White House described the decision as a “judicial coup” and announced plans to appeal all the way to the Supreme Court if necessary. They argued that the tariffs were essential for protecting the national economy amid ongoing global uncertainty and intensifying trade competition, especially with China.

However, many analysts believe the chances of overturning the decision are slim, given the strong legal foundation. The case has reignited debates over the separation of powers between the executive and legislative branches, marking a pivotal moment in US political and legal dynamics.

Political Implications and the Future of Trade Policy

This decision could trigger sweeping reforms in US trade governance. Calls for stronger legislative oversight of tariff decisions are gaining traction, with lawmakers floating proposals such as the Trade Review Act, aimed at tightening congressional control over unilateral presidential tariff actions. If enacted, this legislation would provide an additional safeguard against potential abuses of executive power.

On the global stage, the decision signals America’s renewed commitment to the rule of law and a more transparent and predictable international trading system. Key trading partners like China and Mexico welcomed the move, hoping for greater stability in future bilateral trade relations.

A New Momentum for World Trade

The US Court of International Trade’s decision to strike down Trump’s tariffs is a watershed moment in global trade history. By reaffirming legal limits on executive authority, the United States demonstrates its commitment to the rule of law and international market stability. Moving forward, this decision is expected to guide the creation of fairer, more transparent global economic policies.