- President Donald Trump suffered a stunning legal defeat on Wednesday after a federal court invalidated the extensive tariffs he rolled out in early April on “Liberation Day.” The tariff announcement—broader and more aggressive than expected—sent stock markets into a spiral and bond markets into the yips. In response to the ruling, White House Spokesman Kush Desai said “unelected judges” should not decide how to address a national emergency.
The United States Court of International Trade rule ruled on Wednesday that President Donald Trump did not have authority to “impose unlimited tariffs on goods from nearly every country in the world” and blocked Trump’s prized tariff program.
The ruling struck down tariffs of 25% on Canada and Mexico and 20% on products from China in addition to the 10% baseline tariff on all the U.S. trading partners. The court ruled the International Emergency Economic Powers Act (IEEPA), which Trump relied on as the basis for his power to unleash the tariffs, did not give him unbounded authority. The court wrote “any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.”
The ruling is immediate and comprehensive. It came after multiple businesses and states sued the Trump Administration and Secretary of Commerce Howard Lutnick.
“There is no question here of narrowly tailored relief; if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all,” states the ruling, written by a panel of three judges. “The challenged Tariff Orders will be vacated and their operation permanently enjoined.”
In a statement, White House spokesman Kush Desai said foreign countries’ “nonreciprocal treatment of the United States has fueled America’s historic and persistent trade deficits.”
“These deficits have created 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,” the statement reads. “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 Greatness.”
According to the ruling, Trump can only use emergency powers granted by the IEEPA under certain conditions. First, there has to be a threat to national security, foreign policy, or the U.S. economy; the threat must be “unusual and extraordinary;” a national emergency must be declared because of the threat; and, the president using the IEEPA authority must “deal with” the threat.
Plaintiffs in the case argued the executive orders that implemented the tariffs didn’t meet the “unusual and extraordinary” conditions and that the tariffs, meanwhile, didn’t deal with them anyway.
“‘Deal with’ connotes a direct link between an act and the problem it purports to address,” the ruling states. “A tax deals with a budget deficit by raising revenue. A dam deals with flooding by holding back a river. But there is no such association between the act of imposing a tariff and the “unusual and extraordinary threat[s]’ that the Trafficking Orders purport to combat.”
Accordingly, customs officers collecting tariffs on lawful imports does not relate to foreign government’s efforts to arrest and thwart illicit drug operations and dealers. The executive orders that paved the way for tariffs cited illegal drugs as the catalyst, but if the IEEPA is the basis for the order, the tariffs should deal specifically with the drug problem. Instead, the government argued tariffs created “leverage” to deal with those issues.
“If ‘deal with’ can mean ‘impose a burden until someone else deals with’ then everything is permitted,” the ruling states. “It means a President may use IEEPA to take whatever actions he chooses simply by declaring them ‘pressure’ or ‘leverage’ tactics that will elicit a third party’s response to an unconnected ‘threat.’”
This story was originally featured on Fortune.com
