US President Donald Trump suffered a significant blow on Wednesday when a federal court in New York blocked his plan to impose high import tariffs on nearly every nation across the world.
Trump overstepped his authority when he used the 1977 International Emergency Economic Powers Act to declare a national emergency and defend the sweeping tariffs, according to ruling by a three-judge panel of the U.S. Court of International Trade.
In addition to upending decades of U.S. trade policy, the tariffs shook financial markets, interfered with international trade, and increased the risk of price increases and a global recession in the United States and around the world.
Trade-related civil proceedings fall under the jurisdiction of the U.S. Court of International Trade. Its rulings may be challenged in Washington before the U.S. Court of Appeals for the Federal Circuit and, eventually, the Supreme Court, where legal challenges to Trump’s tariffs are most likely to end up.
The tariffs are being challenged in at least seven lawsuits. The trade court combined two claims, one from 12 U.S. states and one from five small enterprises, in its decision on Wednesday.
Other Trump tariffs, such as those on foreign steel, aluminum, and automobiles, are still in effect because of the verdict. However, those taxes were levied in accordance with a separate legislation that prohibited the president from enforcing them at his own discretion and necessitated a Commerce Department investigation.
The federal court’s ruling blocks the tariffs that Trump previously imposed on China, Mexico, and Canada, as well as those last month on nearly all of the US’ trading partners.
Trump put 10% baseline tariffs on nearly everyone else and so-called reciprocal tariffs of up to 50% on European Union with which the US has a trade deficit on April 2. Later, he extended the 50% tariffs to 90 days giving EU time to agree to lower export barriers to the US. He did, however, maintain the baseline tariffs. He used the long-standing trade deficit in the US as “a national emergency” to defend the taxes under IEEPA, claiming unprecedented authority to act without the consent of Congress.
The US president used the legislation to impose tariffs on China, Canada, and Mexico in February, claiming that the illegal drug and immigration flow across the US border constituted a national emergency and that the three nations needed to do more to halt it.
Congress has the authority to impose taxes, including tariffs, under the US Constitution. However, lawmakers have given presidents more authority over tariffs, and Trump has taken full advantage of this.
The Trump administration is expected to file an appeal.