Court Ruling Deals Setback to Trump Administration’s Tariff Strategy

 Washington, D.C., May 30, 2025 — The Trump administration is scrambling to contain the fallout after a landmark ruling by the U.S. Court of International Trade determined that a key pillar of the president’s global tariff regime exceeds the authority granted to the executive branch.

In a decision that sent shockwaves through both legal and financial circles, a three-judge panel ruled Wednesday that the administration’s sweeping use of tariffs under the International Emergency Economic Powers Act (IEEPA) was unlawful. The court emphasized that while it was not evaluating the policy's merits, it found the legal basis for the tariffs lacking under current federal statutes.

The ruling immediately invalidated all tariffs issued under the IEEPA, prompting the administration to seek emergency relief from the appellate court. A temporary stay was granted Thursday, delaying implementation of the lower court’s decision pending a full appeal. Administration officials have signaled their intent to escalate the case to the U.S. Supreme Court if necessary.

White House Press Secretary Karoline Leavitt condemned the ruling, accusing the judiciary of overreach. “These judges have brazenly usurped President Trump’s constitutional authority,” she said, urging the Supreme Court to intervene.

The ruling follows a wave of legal challenges, including suits from small businesses and a coalition of U.S. states led by Oregon. Plaintiffs argued that the IEEPA was never intended to authorize trade policy measures, and that the U.S. trade deficit does not constitute the “unusual and extraordinary threat” required for the law’s application. Oregon Attorney General Dan Rayfield hailed the decision, stating: “This ruling reaffirms that our laws matter, and that trade decisions cannot be made solely at the president’s discretion.”

Adding to the administration’s challenges, a separate ruling from District Judge Rudolph Contreras in Washington, D.C., found the tariffs unlawful in a case brought by Illinois-based toy importers. A preliminary injunction was issued against further tariff collections from the companies involved.

Financial markets responded positively to the court’s decision. The U.S. dollar strengthened significantly, with gains against major currencies including the euro, yen, and Swiss franc. European markets rallied, while U.S. and Asian indices posted modest gains.

Analysts noted that while the ruling represents a legal and political blow to Trump’s aggressive trade posture, it does not nullify tariffs issued under other statutory frameworks, such as those targeting steel, aluminum, and automobiles.

Legal experts and trade analysts at Goldman Sachs acknowledged the setback but suggested the administration could pursue alternative legal pathways to impose tariffs, albeit through slower and more constrained mechanisms.

Meanwhile, the president’s response has been characteristically combative. In a lengthy social media post, Trump accused the judges of personal bias, questioning their motives without addressing the court’s 49-page legal rationale. “How could these judges do such damage to our country? Is it pure hatred of Trump?” he asked, overlooking the fact that one of the judges was his own appointee.

Deputy Chief of Staff for Policy Stephen Miller echoed Trump’s sentiment, labeling the decision a “judicial coup” on social media.

At least seven legal challenges are currently pending against Trump’s border tariffs, the centerpiece of his trade strategy. The administration has justified these measures as necessary to address national security concerns, including illegal immigration and drug trafficking — a rationale critics argue is tenuous and legally unsubstantiated.

Elon Musk, a prominent business leader and former administration advisor, announced his resignation from government-related roles in the wake of the ruling, further highlighting the growing divergence between corporate leadership and White House trade policy.

As the legal battle continues, the future of the administration’s ambitious trade agenda hangs in the balance — with significant implications for international commerce, domestic industries, and the broader U.S. economy.