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Trump dealt legal blow as court strikes down global tariffs
A U.S. trade court has struck down most of Donald Trump's emergency-imposed global tariffs, calling them illegal. Markets rallied on the ruling, but uncertainty lingers as the government prepares an appeal.
A U.S. trade court ruled Trump's global tariffs illegal, dealing a major blow to his trade agenda.
The decision immediately lifted U.S. stock futures and strengthened the dollar.
The ruling applies to emergency-based tariffs, not Section 232 or Section 301 levies.
An appeal is underway, but markets are now reassessing trade risk.
Court ruling rejects Trump’s tariff authority
In a landmark decision, the U.S. Court of International Trade ruled that the majority of tariffs imposed by former President Donald Trump under emergency powers were unlawful. The court unanimously sided with Democratic-led states and small businesses, concluding that the International Emergency Economic Powers Act (IEEPA) was misused to justify sweeping levies unrelated to genuine national emergencies. The ruling invalidates key components of Trump's trade war arsenal, including global flat-rate tariffs and fentanyl-related levies on China, Canada, and Mexico.
However, tariffs issued under different legal provisions, including Section 232 (targeting steel and aluminum) and Section 301 (focused on Chinese goods), remain unaffected. The Justice Department swiftly filed an appeal, leaving the door open for further litigation and a possible Supreme Court review.
The court gave the administration ten days to comply with the order but offered no guidance on how to unwind the complex web of tariffs. Unless the appeal succeeds, the ruling stands as a permanent block on a significant portion of Trump's tariff legacy.
Market reaction and legal implications
Financial markets responded swiftly to the ruling. U.S. stock futures surged, with Nasdaq 100 contracts rising more than 2%, while the dollar gained ground and the Japanese yen fell. Investors viewed the ruling as a signal of easing trade tensions and a potential boost to multinational companies exposed to cross-border costs.
From a legal standpoint, the judgment establishes new constraints on presidential authority over trade policy. The court dismissed the government's claim that trade deficits and border drug trafficking constituted a national emergency, arguing instead that the rationale was designed to “pressure” trading partners, not to address an actual emergency.
The court’s summary judgment—essentially a final decision without a full trial—could limit future efforts to impose sweeping tariffs via executive orders. While Congress debates broader reciprocal tariff powers, the judiciary’s stance now casts doubt over any similar use of IEEPA going forward.
Legal clarity meets geopolitical uncertainty
While the immediate market response has been positive, questions remain about how the Trump administration might react. The ruling injects legal clarity into an area of long-standing ambiguity, yet raises new concerns about the executive branch's ability to conduct aggressive trade policy without congressional backing.
Informed observers suggest that while the decision may provide short-term relief for global trade flows, it leaves behind a vacuum in U.S. trade enforcement strategy. The appeal process, and potential Supreme Court involvement, will be closely watched by businesses, investors, and trading partners alike.
