Washington: A federal trade court has ruled against US President Donald Trump's proposed 'Liberation Day' import tariffs, declaring that he exceeded his constitutional authority.
The Court of International Trade in Manhattan, in a decision by a three-judge panel on Wednesday (US time), found that Trump's broad tariffs on trade-surplus nations violated the limits set by the International Emergency Economic Powers Act (IEEPA), according to local media reports.
The Trump administration sought to defend the tariffs by referencing the IEEPA, a statute intended to address "unusual and extraordinary" risks during a national emergency.
Trump administration officials defended the tariffs as necessary to address national security concerns arising from trade imbalances, particularly with China and the European Union.
They cautioned that striking down the tariffs could undermine ongoing trade negotiations with China and risk escalating tensions between India and Pakistan.
In court filings, Trump's legal team argued that the president had strategically exercised his emergency economic powers to stabilise the situation in South Asia.
They alleged that Trump's tariff threats helped broker a ceasefire between India and Pakistan in May, following a terror attack in Jammu and Kashmir's Pahalgam on April 22, in which Pakistan-based militants were involved. However, New Delhi has maintained that the Trump administration did not have any say in the conflict between the two nations, and Pakistan urged India to halt the military action.
"Trade negotiations are at a delicate stage," officials told the court, pointing to July 7 as the deadline to finalise pending agreements with several countries.
But the court was not persuaded. In its ruling, the panel declared that the president cannot assume "unbounded" authority over trade policy.
"Congress did not delegate unbounded powers to the President under IEEPA," the court said. "The Constitution gives Congress exclusive authority to regulate commerce with foreign nations. That authority is not displaced simply because the President invokes emergency powers."
The court clarified that its decision did not assess the wisdom or effectiveness of using tariffs as a policy tool but focused strictly on legality.
"The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because federal law does not allow it," the ruling read.
The bench added, "An unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government."
The ruling came in response to two lawsuits – one filed by the Liberty Justice Centre on behalf of five small American businesses that rely on imports from targeted countries and another by 13 US states.
Plaintiffs argued that the tariffs would severely harm their business operations and increase costs without due legislative process. At least five additional legal challenges to the tariff measures remain pending across the country.
Despite the ruling, the Trump administration filed an immediate notice of appeal, indicating the former president's determination to continue the legal fight.
On April 2, Trump introduced the tariffs, setting a baseline 10% duty, with higher rates targeting China and European Union members.
The announcement rattled financial markets, prompting a temporary halt on certain country-specific levies within a week.
In a bid to stabilise trade relations, the administration announced on May 12 that it would temporarily ease the steepest tariffs on China while working toward a broader trade agreement. As part of the deal, both nations agreed to reduce select tariffs for at least 90 days.
Following the court's ruling, White House deputy chief of staff Stephen Miller lashed out at the judiciary, declaring on social media, "The judicial coup is out of control."
(inputs from IANS)