US trade court strikes down wide swath of Trump tariffs

A US federal court has delivered a broad blow to President Donald Trump's tariff regime, finding that he lacked authority under the International Emergency Economic Powers Act of 1977 to authorize worldwide, retaliatory tariffs, as well as those tariffs the administration imposes on Canada, Mexico and China by citing drug trafficking concerns.

Trump has made tariffs the core of his economic and foreign policy. In February, he ordered a 25% tariff on all goods flowing from Mexico and Canada under the guise of coping with fentanyl crossing both borders, and he imposed a 20% tariff on China for similar reasons, which the court refers to as "trafficking tariffs."

In addition, on April 2, dubbed "Liberation Day," Trump imposed a global 10% tariff on all imports to the US and variable "reciprocal" tariffs on most countries. Although Trump has modified or paused most of these tariffs, the court on May 28 struck down both sets of duties as exceeding the president's authority.

"The worldwide and retaliatory tariff orders exceed any authority granted to the president by IEEPA to regulate importation by means of tariffs," said the unanimous ruling by a three-judge panel of the US Court of International Trade, which has jurisdiction over US trade matters. "The trafficking tariffs fail because they do not deal with the threats set forth in those orders."

The court entered a summary judgment against the US, stating the tariff orders will be vacated and their operation "permanently enjoined."

The White House issued its own retort to the judges.

"It is not for unelected judges to decide how to properly address a national emergency," White House spokesperson Kush Desai said in a statement. "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."

The Trump administration has already notified the court that it intends to appeal the ruling to the US Court of Appeals for the Federal Circuit.

Metals exemptions

The worldwide and retaliatory orders referred to those that the administration imposed on all imports from trading partners, currently in place at 10% for all countries, with country-specific rates slated to start July 9.

Most metals and energy products were exempted from the various tariffs or excluded under provisions in the US-Mexico-Canada trade agreement. The court's decision does not touch "Section 232 tariffs," which are imposed on national security grounds after an investigation by the Commerce Department. Thus, 25% tariffs on steel and aluminum remain in place.

Because of the Constitution's express allocation of tariff power to Congress, the three-judge panel said it did not read the IEEPA to "delegate an unbounded tariff authority to the President." From there, it said the worldwide and retaliatory tariffs lacked "any identifiable limits."

Further, the panel found that the trafficking tariffs do not meet the IEEPA's limitation that they be used only to deal with an "unusual and extraordinary threat."

Tariffs must directly "deal with" the problem enunciated under the national emergency. The court suggested that even the government did not believe the tariffs were addressing the imbalance of trade they were purported to tackle.

"The government's 'pressure' argument effectively concedes that the direct effect of the country-specific tariffs is simply to burden the countries they target," the court wrote. "However sound this might be as a diplomatic strategy, it does not comfortably meet the statutory definition of 'deal[ing] with' the cited emergency. It is hard to conceive of any IEEPA power that could not be justified on the same ground of 'pressure.'"