The United States International Trade Court, a federal court based in New York, created under the Constitution and specialized in arbitrating issues arising from customs and foreign trade laws, decreed on Wednesday night that the so-called "reciprocal tariffs" imposed by Donald Trump on virtually all his trading partners on April 2, Liberation Day, are illegal, an abuse of powers, and therefore must be removed within 10 days. If successful, this would not only be a major blow to the administration's policies but would also put an end to the global trade war.
Similarly, the panel, composed of three veteran judges, some appointed by Ronald Reagan in the 1980s, has blocked a significant portion of the restrictions on Chinese, Canadian, and Mexican products, which were applied through another avenue, deeming that shortcuts and "levers" cannot be used, and that Trump's argument regarding fentanyl is an invalid excuse, as tariffs do not address that issue. "The judicial blow is out of control," criticized Stephen Miller, one of the most powerful advisors in the White House.
The ruling, of enormous significance and which has boosted stock futures, immediately angered the administration: "It is not up to unelected judges to decide how to properly address a national emergency. President Trump pledged to prioritize the United States, and the administration is committed to using all resources of the executive branch to address this crisis and restore American greatness," reacted in a statement. However, the judges do not comment on the 25% tariffs on steel, aluminum, cars, and their components, which may remain in place.
To implement these reciprocal tariffs, which initially ranged from a minimum of 10% on all products to highs approaching 100% in some cases (using a mathematical formula without any sense, simply reflecting the U.S. trade deficit with each country as a percentage), Trump relied on the IEEPA, the International Emergency Economic Powers Act of 1977, and the panel considers, listening to arguments from various states and business associations, that the president exceeded his powers, assuming prerogatives that according to the Constitution depend solely on Congress. Therefore, the Executive has 10 days to take the necessary steps to remove import surcharges.
"The court holds that the IEEPA does not authorize any of the global, retaliatory, or traffic tariff orders that exceed any authority granted to the president to regulate imports. The challenged tariff orders will be annulled, and their application permanently suspended," the ruling states unequivocally. "Executive Order 14193, imposing tariffs to address the flow of illicit drugs through our northern border; Executive Order 14194, imposing tariffs to address the situation at our southern border; Executive Order 14195, imposing duties to address the synthetic opioid supply chain in the People's Republic of China; Executive Order 14257, regulating imports with a reciprocal tariff to rectify trade practices contributing to the large and persistent annual trade deficits of the United States and all its modifications and amendments, are declared, and hereby, invalid and contrary to law."
Despite the Republican Party's majority in both chambers of Congress, Trump opted from the beginning to use almost exclusively executive orders. This was to avoid having to convince all his congressmen, some of whom, pro-market, oppose protectionism. Also, to establish almost total executive authority in decision-making.
"The president identifies the emergency and decides the means to address it," declared Brett Shumate, a lawyer from the Department of Justice, before the court in one of the hearings, explaining that the tactic was to "convince our trading partners" and gain leverage to then close trade deals. However, this reasoning is precisely what the three judges do not accept, as they argue that imposing levies on legally imported goods has no effect on immigration or drug trafficking issues, and that the law cannot be twisted to pressure other governments in this way. "If that were accepted, everything would be valid," they warn.
However, the powers lie with Congress, even though it has been relinquishing its powers over time, often leaving decisions regarding foreign trade in the hands of the White House. The IEEPA does not explicitly mention anywhere that tariffs can be a tool available to the president to protect the United States from "economic threats." But Trump has repeatedly invoked emergency economic laws, or a 1797 law on foreign enemies, to make drastic decisions on immigration quickly.
Wednesday's ruling states that "an unlimited delegation of tariff authority would constitute an improper transfer of legislative power to another branch of government and dismantles one of the administration's main arguments, stating that it is hardly justifiable to use emergency legislation due to relevant trade deficits, as this has been happening for decades. It is not an anomaly, it is the norm, a product of factors such as the strength of the dollar or it being the international financial system's reference currency since the Bretton Woods agreements.
The plaintiffs argued in the hearings that no other president had previously invoked the IEEPA to impose tariffs, specifying that the U.S. trade deficit has existed for decades without causing an economic crisis. "The enactment of Section 122 by Congress indicates that even the significant and serious U.S. balance of payments deficits do not require the use of emergency powers and only justify the President imposing limited remedies subject to listed procedural restrictions," the ruling agrees.
Since January, the courts have been restraining many of the president's measures, leading to a standoff and repeatedly flirting with a constitutional crisis, as Trump and his team argue that the judges are overstepping and trying to govern the country. Kush Desai, a White House spokesperson, immediately reacted to the court's ruling, lamenting in a statement that "unfair trade relations" have "devastated American communities, left our workers behind, and weakened our defense industrial base, facts that the court did not question (...) It is not up to unelected judges to decide how to properly address a national emergency," he said, warning that Trump will continue to use "all resources of the executive branch to address this crisis."
"The government argues that as long as the president claims to face an unusual and extraordinary threat, he can impose tariffs of any amount on any country and for any duration, without any court being able to review them," stated the lead counsel for the plaintiffs during the final hearing. "That is a position that no court has ever taken, and until this year, a power that no president had ever exercised."
The administration, which already anticipated the ruling, has informed that it will appeal on the same Wednesday night through a document sent by Claudia Burke, head of commercial litigation at the Department of Justice. Appeals to decisions of this court are heard by the United States Court of Appeals for the Federal Circuit and ultimately by the Supreme Court. Where the case will likely end.
If this route does not succeed, Trump can always seek other options. He already considered imposing tariffs under Section 301 of the Trade Act of 1974, which allows combating unfair trade practices, and that is what he did to raise tariffs on China during his first term. Or seek Congress to decide, although that seems much more complicated.