A federal court on Wednesday found President Donald Trump does not have the authority to impose his sweeping tariff strategy.
The US Court of International Trade’s three-judge panel was unanimous in its ruling, declaring that the tariffs imposed by the Trump administration would be vacated.
The ruling hands a legal victory to a group of small business owners who sued the Trump administration over its aggressive tariff plan. Companies both large and small have objected to Trump’s trade strategy due to the increased import costs and subsequent uncertainty in the market, which Treasury Secretary Scott Bessent described as “strategic.”
The lawsuit argued that the president’s use of the International Emergency Economic Powers Act of 1977 to bypass Congress was an overreach of his executive power, and that persistent trade deficits with countries he’d imposed tariffs upon did not constitute an “unusual and extraordinary threat” under which the act could be deployed.
The lead plaintiffs in the case, Victor Schwartz and his daughter Chloe Schwartz, who own and run the New York-based specialty wine and spirits importing company VOS Selections, previously told Business Insider the tariffs were catastrophic for their company. They dampened consumer sentiment and decreased sales by 16% compared to the first quarter of 2024.
White House spokesperson Kush Desai told Business Insider in a statement that foreign countries’ “nonreciprocal treatment of the Unites 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,” Desai’s statement said. “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.”
No ‘unbounded authority’
The federal government can appeal the court’s decision, in which case the proceedings will be heard in the court of appeals. Any subsequent appeal would be heard by the Supreme Court.
The Constitution grants Congress the exclusive power to levy tariffs and duties. However, BI previously reported that, in recent years, lawmakers have taken a less active role in doing so, instead allowing the executive branch to execute tariff policies within the guidelines defined by Congress.
Six different statutes control how the president can use tariffs. Only three carve-outs allow the president to impose tariffs without a congressional investigation. Still, only the IEEPA has ever been used.
Trump argued that he had the authority to impose his tariff strategy under the IEEPA, which allows the president to declare an emergency under the National Emergency Act to regulate or prohibit imports. The Court of International Trade disagreed.
“The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder,” the ruling read.
This is a developing story. Please check back for updates.