U.S. Trade Court Blocks Trump’s Global Tariffs, Citing Executive Overreach

The decision, delivered on May 28, 2025, by a three-judge panel at the James L. Watson Court of International Trade in New York, invalidates much of Executive Order 14257, which Trump had signed on April 2, declaring a so-called “Liberation Day” for U.S. industry. The order authorized a blanket 10% tariff on virtually all foreign imports, with additional penalties for goods originating from trade partners including China, Canada, and Mexico.

The tariff package was introduced as part of Trump’s broader "America First" revival platform during his second term in office. Trump argued the tariffs were necessary to correct long-standing trade imbalances and to safeguard national industrial capacity, framing the initiative as a patriotic response to what he described as “economic aggression” by foreign nations.

Critics, however, immediately questioned the legal foundation of the order. The administration cited the International Emergency Economic Powers Act (IEEPA) of 1977 as the statutory basis, claiming that trade imbalances and overreliance on imports posed an "unusual and extraordinary threat" to national security and economic stability.

But the court firmly rejected this rationale. In its unanimous opinion, the panel ruled that IEEPA does not give the president carte blanche to reshape U.S. trade policy unilaterally, especially in the absence of a clear, imminent threat. The judges emphasized that trade deficits and supply chain concerns, while economically significant, do not meet the legal threshold for invoking emergency powers under IEEPA.

The U.S. Court of International Trade found that the executive branch exceeded its authority by using emergency economic powers to impose the “Liberation Day” tariffs. The judges ruled that trade deficits do not constitute the kind of “unusual and extraordinary threat” required under the International Emergency Economic Powers Act (IEEPA), and therefore cannot justify sweeping tariff actions. The court also underscored the need to preserve constitutional limits on presidential power, especially when such actions encroach upon legislative authority.

The lawsuit was spearheaded by a coalition of small and mid-sized American businesses, largely in manufacturing, retail, and logistics, who argued that the tariffs were economically destructive and legally unfounded. The plaintiffs were joined by twelve states, including Oregon, New York, and Illinois, which claimed that the tariffs had directly harmed consumers and businesses through inflated prices and disrupted supply chains.

Legal experts hailed the decision as a reaffirmation of the constitutional limits on executive power.

The U.S. Chamber of Commerce and the National Retail Federation also welcomed the ruling, arguing that it restored predictability to trade policy and protected American consumers from unnecessary costs.

Despite the setback, the Trump administration has indicated it will appeal the decision, potentially escalating the case to the U.S. Supreme Court. In a statement issued by the Office of the U.S. Trade Representative, the administration defended the tariffs as “necessary and justified” in the interest of national economic security and reiterated its belief that the president acted within his legal rights.

“It is not for unelected judges to decide how to properly address a national emergency. 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 prosperity,” said Kush Desai, spokesperson for the White House Office of Trade and Manufacturing Policy.

The case reignites the debate over the limits of presidential power in setting U.S. trade policy, a domain historically reserved for Congress under Article I of the Constitution. In recent years, however, successive presidents have relied on laws like IEEPA and the Trade Expansion Act of 1962 to unilaterally impose tariffs, often citing national security or emergency justifications.

Notably, this ruling does not affect earlier tariffs imposed under other authorities, such as Section 232 of the Trade Expansion Act, which were used during Trump’s first term to levy steel and aluminum tariffs. Those measures remain in effect.

Still, legal observers believe the decision could constrain future uses of IEEPA for trade purposes unless there is a clear and imminent threat to national security.

Market analysts say the ruling may ease concerns of retaliatory trade measures from key allies and stabilize import costs for American businesses, at least in the short term.

Politically, the ruling may embolden critics within Congress, both Democrats and moderate Republicans, who have long advocated for restoring legislative oversight of trade and tariff powers. A bipartisan resolution introduced earlier this year by Senators Ron Wyden and Rand Paul seeks to curtail the president’s ability to impose emergency tariffs without congressional approval by repealing the national emergency declaration used to justify the “Liberation Day” tariffs.

The ruling has reignited momentum in Congress to reclaim its constitutional role in trade policymaking. Lawmakers across party lines, including Senator Ron Wyden, have emphasized the need to restore checks and balances by limiting the executive branch’s unilateral authority over tariffs. As legal and legislative battles unfold, the court’s decision marks a pivotal moment in the ongoing struggle over who controls the levers of U.S. economic power.