NEW YORK — The US Court for International Trade (CIT) said President Donald Trump lacks the authority to levy sweeping tariffs on virtually all nations, a ruling that would block the duties he announced in early April on the administration’s so-called “liberation day.”

In the May 28 decision by a three-judge panel, the CIT also called for a halt to tariffs imposed in early February on Mexico, Canada and China. Trump had declared those tariffs were necessary to force the three countries to address a national emergency involving the trafficking of illicit drugs such as fentanyl at the US southern and northern borders.

But the CIT ruling was swiftly put on hold. On May 29, the US Court of Appeals for the Federal Circuit granted a same-day motion by the US Department of Justice for an immediate administrative stay that keeps the tariff measures in effect while the trade court’s decision is under appeal.  

Trump had instituted the tariffs by executive order under the International Emergency Economic Powers Act of 1977 (IEEPA), which gives the president limited latitude to levy tariffs without congressional approval to deal with an “unusual and extraordinary threat” for which a national emergency has been declared. The duties also cannot be implemented for any other purpose. Though the initial tariffs were aimed at the smuggling of illegal drugs, the Liberation Day tariffs were put in place to remedy persistent annual US goods trade deficits, which the Trump administration claimed represent a national emergency.

However, the CIT determined that the worldwide and reciprocal tariffs levied exceed the powers granted to the president under the IEEPA and that the trafficking-related tariffs don’t directly address the threat for which they were instituted.

In the decision, the court ruled on two cases: one brought by five small businesses and another brought by 12 states (Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York and Vermont).

“The Constitution assigns Congress the exclusive powers to ‘lay and collect taxes, duties, imposts and excises’ and to ‘regulate commerce with foreign nations,’” the CIT said in its decision. “The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 delegates these powers to the president in the form of authority to impose unlimited tariffs on goods from nearly every country in the world. The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed.”

Range of tariffs nullified

The CIT’s decision would invalidate Trump’s orders imposing 25% duties on products imported to the United States from Canada and Mexico and a 20% tariff on imports from China, which became effective Feb. 4. It also would void the April 2 “Liberation Day” levies of a 10% tariff on all US trading partners and, to address trade deficits, US retaliatory tariffs of 20% to 50% on roughly 60 countries, due to go into effect on July 9 pending the outcome of trade negotiations. Published reports said the ruling may require the government to pay back tariffs already collected.

“The court holds for the foregoing reasons that IEEPA does not authorize any of the worldwide, retaliatory or trafficking tariff orders,” the CIT concluded. “The worldwide and retaliatory tariff orders exceed any authority granted to the president by IEEPA to regulate importation by means of tariffs. The trafficking tariffs fail because they do not deal with the threats set forth in those orders.”

In the summary judgment, the CIT ruled that “the challenged tariff orders will be vacated and their operation permanently enjoined.”

Sector-specific tariffs imposed by the Trump administration, though, aren’t covered by the CIT ruling because they fall under Section 232 of the Trade Expansion Act of 1962, which enables the president to enact tariffs for national security purposes. These include levies of 25% on imported steel and aluminum products, announced in March (and expanded in April to include aluminum cans); 25% on imported automobiles, announced in April; and 25% on imported automobile parts, announced in May.

According to published reports, the administration is mulling potential tariffs on imports of semiconductors, pharmaceuticals, lumber and other products. Trump also may have more tariff leeway under Section 301 of the Trade Act of 1974, which allows the president to levy duties targeting unfair foreign trade practices and was the basis used for his first-term tariffs on China.

Supreme Court intervention possible

On May 29, the DOJ filed a motion with the US Court of Appeals requesting a stay of the CIT decision pending an appeal. In the filing, department attorneys said the CIT issued an “unprecedented and legally indefensible injunction” that “permanently enjoined the president’s executive orders regarding tariffs and compelled the executive branch to issue administrative orders unwinding the tariffs in 10 calendar days.”

“This court should immediately stay that judgment, which is rife with legal error and upends President Trump’s efforts to eliminate our exploding trade deficit and reorient the global economy on an equal footing,” the DOJ said in the filing. “The injunction unilaterally disarms the United States in the face of the longstanding predatory trade practices of other countries.”

The motion also cited the potential impact on current trade talks, noting that “the injunction threatens to unwind months of foreign policy decision-making and sensitive diplomatic negotiations, at the expense of the nation’s economic well-being and national security.”

In the filing, the DOJ said it would seek emergency relief from the US Supreme Court “tomorrow” — i.e. May 30 — if an immediate stay and a stay pending an appeal on the CIT ruling aren’t granted. The motion said a stay wouldn’t harm the plaintiffs, “who can be made whole through a refund, including interest, if tariffs paid during these appeals are ultimately held unlawful.”

“The political branches, not courts, make foreign policy and chart economic policy,” the DOJ argued in the motion, “yet the injunction injects the CIT into the center of our nation’s foreign policy and disables the president from using a critical tool that Congress authorized him to wield in the middle of time-sensitive negotiations with multiple foreign countries over future trade agreements.”

In a media briefing on May 29, White House press secretary Karoline Leavitt appeared to indicate the tariff ruling was headed to the Supreme Court.

“These judges are threatening to undermine the credibility of the United States on the world stage,” Leavitt said. “The administration has already filed an emergency motion for a stay pending appeal — an immediate administrative stay to strike down this egregious decision. But ultimately, the Supreme Court must put an end to this, for the sake of our Constitution and our country.”

A second federal court decision on Trump’s tariffs also has come down. On May 29, the US District Court for the District of Columbia ruled that the administration’s worldwide tariffs are illegal and issued a preliminary injunction for 14 days while an appeal is considered. In a case brought by two small businesses — which manufacture most of their products in China, Taiwan, Korea, Vietnam, Thailand and India — the court determined that the IEEPA doesn’t allow the US president “to unilaterally impose, revoke, pause, reinstate and adjust tariffs to reorder the global economy.”