WASHINGTON, D.C. — A federal trade court on Wednesday dealt a significant blow to President Donald Trump’s economic agenda by blocking his administration’s sweeping tariffs on imported goods. The decision, delivered by a three-judge panel at the U.S. Court of International Trade in New York, declared that the president overstepped his authority under the 1977 International Emergency Economic Powers Act (IEEPA).
According to the Associated Press, the ruling “swiftly threw into doubt Trump’s signature set of economic policies that have rattled global financial markets, frustrated trade partners and raised broader fears about inflation intensifying and the economy slumping.”
The court’s decision stems from a wave of legal challenges asserting that President Trump has repeatedly bypassed Congress and used emergency powers as a means to reshape U.S. trade policy unilaterally. The court concluded that Trump’s use of tariffs to manage trade deficits and influence global negotiations exceeded the legal scope of IEEPA, stating, “The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.”
Trump’s administration has argued that longstanding trade deficits constitute a national emergency, with officials claiming that such deficits weaken the country’s economic and national security. White House spokesperson Kush Desai defended the administration’s rationale following the ruling, stating, “Trade deficits are a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute.”
Desai added, “The administration remains committed to using every lever of executive power to address this crisis and restore American Greatness.”
The court ruling challenges a central tactic of the president’s second-term trade strategy, which relied heavily on tariffs as leverage to bring foreign competitors to the negotiating table. President Trump has long asserted that these tariffs would repatriate manufacturing jobs and reduce the federal budget deficit. However, critics say the policy has burdened consumers and businesses without delivering the promised economic gains.
At least seven lawsuits are pending against the administration’s tariff policy. Plaintiffs — including a group of small businesses and a coalition of a dozen states led by Oregon — argue that the trade deficit, though longstanding, does not meet the legal threshold of an emergency.
“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” Oregon Attorney General Dan Rayfield said in a statement.
Among the plaintiffs is V.O.S. Selections, a small wine importer whose owner claims the tariffs threaten the company’s survival. The broader impact of Trump’s tariffs — including what the administration called “Liberation Day” duties — has been widely debated. While the measures shook financial markets and prompted economic downgrades from analysts, their actual effect on the U.S. economy remains uncertain.
Trump’s legal team has indicated it will appeal the ruling, setting up what is likely to be a lengthy battle that could reach the Supreme Court. In the meantime, the White House has not clarified whether it will pause its current tariff regime or seek congressional authorization to continue.
For now, the president’s ability to unilaterally impose tariffs under emergency authority has been curtailed, marking a pivotal moment in the ongoing debate over the limits of executive power in U.S. trade policy.