U.S. court blocks Trump’s reciprocal tariffs

May 29, 2025 (MLN): The U.S. Court of International Trade blocked the steep reciprocal tariffs unilaterally imposed by former President Donald Trump in April, ruling that he exceeded his authority under the International Emergency Economic Powers Act (IEEPA).

The tariffs, aimed at correcting what Trump described as persistent trade imbalances, were declared unlawful by a three-judge panel that said the IEEPA does not authorize a president to levy universal duties on imports.

The court found that the "Worldwide and Retaliatory Tariff Orders" exceeded any authority granted to the president under IEEPA to regulate imports through tariffs.

Furthermore, specific tariffs related to drug trafficking on Canada, Mexico, and China were ruled invalid as they did not address the threats outlined in those orders.

Implementing tariffs typically requires congressional approval, but Trump bypassed Congress by declaring a national economic emergency under IEEPA, which became law in 1977.

The panel ordered a permanent halt to the tariffs at issue and barred any future modifications. The Trump administration was given 10 days to comply with the judges’ orders.

However, tariffs on specific products like aluminum and steel were not impacted by the ruling, as they were not justified under IEEPA.

In response, White House spokesperson Kush Desai said that foreign countries’ nonreciprocal treatment of the U.S. has fueled historic trade deficits, creating a national emergency that harmed American communities and the defense industrial base.

Desai criticized the ruling as an overreach by unelected judges.

Oregon Attorney General Dan Rayfield, a lead plaintiff in the case, praised the decision as a victory for working families and small businesses, calling Trump’s tariffs unlawful, reckless, and economically devastating.

Trade expert Jack Slagle called the ruling a significant setback for the administration but noted it may not end tariffs or the broader trade conflict, as further options remain under review.

The ruling arose from two lawsuits—one by a group of state attorneys general and another by five American businesses affected by the tariffs.

The court stated the tariffs were unlawful for all, not just the plaintiffs, as CNBC reported.

Trump initially unveiled sweeping reciprocal tariffs ranging from 11% to 84% on April 2. He paused the duties on April 9 but kept a baseline 10% tariff on most imports.

The court noted there was no clear link between the president’s goal of reducing drug trafficking and the method used imposing import duties on legal trade.

The panel emphasized that customs collection of tariffs on lawful imports does not clearly relate to foreign governments’ efforts to combat drug trafficking.

The Trump administration has appealed the ruling to the U.S. Court of Appeals for the Federal Circuit, with the Supreme Court potentially having the final say in the case. Dow futures jumped 500 points following news of the ruling.

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