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A US court has ruled that Donald Trump’s “liberation day” tariff scheme was illegal, in a blow to the White House that could throw the president’s global trade policy into disarray.
The US Court of International Trade found on Wednesday that the president did not have the authority to use the emergency economic powers legislation that he cited when he imposed sweeping global tariffs last month.
The ruling by a panel of judges is a dramatic twist in the trade wars that Trump has launched since returning to the presidency, and comes as his administration is racing to cut trade deals after suspending the imposition of most of its higher tariffs.
While the Trump administration said it would launch an appeal, the ruling will embolden opponents of the tariffs in corporate America, foreign capitals and the US Congress.
The judgment affects levies imposed on April 2, including a baseline 10 per cent tariff and higher so-called “reciprocal” duties on many countries, but not sectoral tariffs that he has also imposed on steel and car imports.
US stock index futures and shares in Asia rose after the ruling, extending a rally that was also fuelled by upbeat earnings from chipmaker Nvidia.
S&P 500 futures were up 1.7 per cent in the New York evening, while the US dollar also rose about 0.4 per cent against a basket of six peers following the court decision.
In Asia, Japan’s exporter-heavy Nikkei 225 rose 1.8 per cent in morning trading. Hong Kong’s Hang Seng index was up 1.2 per cent, while South Korea’s Kospi rose 1.8 per cent and Taiwan’s Taiex was flat.
The court made its ruling in response to two cases brought by small businesses and a group of US states.
In its ruling the court said the executive orders in which Trump announced the tariffs “are declared to be invalid as contrary to law”.
“The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President . . . to regulate importation by means of tariffs,” the court’s order said.
A White House spokesperson criticised the ruling, saying “it is not for unelected judges to decide how to properly address a national emergency”. He added: “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis.”
Trump’s April 2 tariff regime sparked weeks of financial market turmoil, which eased when he pulled back from some of the most aggressive levies on trading partners, including China.
Democrats cheered the ruling. “I argued from the start that Donald Trump’s claim that he could simply decree sky-high new taxes on imported goods depended on mangling the Constitution beyond recognition,” said Ron Wyden, the senator from Oregon.
“Trump’s trade taxes jacked up prices on groceries and cars, threatened shortages of essential goods and wrecked supply chains for American businesses large and small.”
One challenge heard by the court in May was from a group of US businesses that said the levies had harmed them, led by wine importer VOS Selections. The second was from 12 US states led by Oregon, which said tariffs would raise the cost to publicly funded organisations of buying essential equipment and supplies.
During the Oregon hearing, Department of Justice lawyer Brett Shumate said an injunction against the tariffs “would completely kneecap the president” when he was on the world stage trying to strike trade deals. Judge Jane Restani replied that the court could not for political reasons allow the president to do “something he’s not allowed to do by statute”.
During the VOS Selections hearing, government lawyer Eric Hamilton said the announcement of tariffs had led countries to start negotiating trade deals with Trump. “Don’t argue policy with the court, that’s not our business,” Restani responded.
Under the US constitution, Congress has the power to set tariffs. But the Trump administration has said the International Emergency Economic Powers Act gives the president the power to do so if there is a declared national emergency.
In declaring a national emergency in his executive order on April 2, Trump cited factors including a lack of reciprocity in bilateral trade relationships, and US trading partners’ policies that suppress domestic wages, amounted to an “unusual and extraordinary threat” to the US economy and to national security.
The court cases challenged his use of those powers.
In the past few days Trump has agreed to delay his threatened 50 per cent tariffs on the EU after talking to European Commission president Ursula von der Leyen.
The US and China have agreed to lower tariffs for 90 days in a major de-escalation. Smartphones and other electronics imported to the US from China had been exempted, but Trump has signalled that this will be temporary.
Additional reporting by Arjun Neil Alim in Hong Kong
