U.S. trade court rules unanimously against Trump tariffs

A three-judge panel at the U.S. Court of International Trade ruled unanimously May 28 that the Trump administration’s use of the International Economic Emergency Powers Act (IEEPA) to institute sweeping tariffs is illegal. The U.S. Court of Appeals for the Federal Circuit will allow the tariffs to stay in place, pending appeal by the Trump administration.

The legal challenges to most of President Donald Trump’s sweeping tariff agenda may go to the Supreme Court, a process that could take additional weeks or months to play out.

Tariffs impacted by the ruling include the 10% tariffs on most imports, as well as more aggressive tariffs imposed in the past on China, Canada, Mexico, beginning in February. The country-specific tariffs made public on April 2 — and put in place for about 13 hours on April 9 before being paused by President Donald Trump until July 9 — are also ruled invalid under this judgment.

The ruling could upend most of the trade action undertaken by the administration over the last several months, as part of a broad policy aimed at reshaping much of the U.S. economy. 

In its judgment, the court found that the administration was attempting to exercise powers granted to Congress, rather than the presidency, in the Constitution.

“Because of the Constitution’s express allocation of the tariff power to Congress …[we] do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers,” the court wrote in its summary judgment.

The president and senior members of his administration have argued that the tariffs were necessary national security measures to combat fentanyl smuggling and trade deficits and to onshore more domestic production.

In the court’s view, Trump and his administration overstepped limits in legal authority in most of the tariffs imposed during this year, either by attempting to use IEEPA in a way it was not meant to be used, or by using the national security law to impose tariffs that “do not deal with the threats set forth in those orders,” with regard to fentanyl smuggling-related rationales for the 25% tariffs on Canadian and Mexican imports, as well as the initial tariffs on Chinese products.

In a much narrower but still important ruling in a separate case on May 29, the U.S. District Court for the District of Columbia granted a preliminary injunction to two U.S. toy companies seeking relief from the same tariffs on the grounds that those import taxes are unlawful. Unlike the trade court ruling, the injunction only applies to those two companies (and is appealable) but provides a template for other companies to petition for temporary relief from the same tariffs.

Notably, neither case affects product-specific tariffs imposed by the administration on automobiles, auto parts, steel, aluminum, or others likely to be put in place this year, including on critical minerals and derivative products, semiconductors, copper and copper derivatives, pharmaceuticals, timber, lumber and certain maritime shipping equipment. Those are in a more standard investigatory process, authorized under a different law that was not a part of the lawsuits that the U.S. trade court ruled on. Lawsuits from a New York-based wine importer, as well as 12 attorneys general (led by Oregon and Arizona), led to the summary judgment on the use of IEEPA, but the administration’s sectoral tariffs on specific products and their derivatives are seen as a more established use of legal authority to impose tariffs and not included in this lawsuit.