In a landmark decision on May 29, 2025, the U.S. Court of International Trade struck down former President Donald Trump’s sweeping “Liberation Day” tariffs, calling them an unconstitutional overreach of executive power. The court ruled that Trump had misused the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad trade restrictions without congressional approval—disrupting nearly $1.8 trillion in global commerce.
Trump’s tariffs were central to his second-term “America First” trade agenda. On April 2, 2025, dubbed “Liberation Day,” he announced a bold new tariff structure: a 10% universal tariff on most imports, up to 50% tariffs on countries with large trade surpluses with the U.S., and 25% tariffs on Canada, Mexico, and China—justified by linking trade imbalances to border security and fentanyl trafficking.
But the court found three major flaws in the policy. First, it ruled that chronic trade deficits do not qualify as the “unusual and extraordinary threats” required under IEEPA. Second, the judges emphasized that only Congress has the constitutional authority to impose taxes and tariffs, and Trump had bypassed the legislative branch entirely. Lastly, the economic impact was severe: evidence presented showed that the tariffs had caused major disruptions in global supply chains, worsened trade relations, and raised recession risks.
While the court’s decision blocks these tariffs, it does not affect earlier duties on steel, aluminum, and automobiles imposed under separate trade laws. However, it reignites a critical debate: how much power should the president have over trade?
Countries like China, India, and the European Union had responded with retaliatory tariffs, legal challenges, and diplomatic pressure. Some nations, like the UK and Canada, had negotiated temporary exemptions to avoid trade war escalations.
India took a strategic approach—filing a WTO notice of retaliation while keeping specifics vague to maintain leverage during trade talks aimed at reducing tariff gaps with the U.S.
Read more: US-China hit pause on trade war with 90-day tariff rollback
Looking ahead, legal experts expect Trump’s team to appeal the ruling. Meanwhile, Congress is considering bipartisan legislation to create a “Tariff Review Commission,” which would limit unilateral executive actions on trade and restore legislative oversight.
The court’s ruling marks a significant check on presidential power—and signals a shift toward more balanced, cooperative trade policy as global tensions begin to ease.
