A sweeping attempt by US President Donald Trump to impose a blanket tariff regime has been dealt a sharp judicial setback, with a US federal trade court striking down the policy as unlawful, raising fresh questions over the limits of executive power in shaping trade policy.
In a significant obstruction to the administration’s economic agenda, the US Court of International Trade ruled 2-1 that the proposed 10 per cent tariff on all imports exceeded the authority granted under Section 122 of the Trade Act of 1974.
The majority held that the law was never intended to justify broad tariff actions based on general trade imbalances. Instead, it was designed to address specific balance-of-payments crises tied to the global monetary system of the 1970s, conditions the court said were not met in this case.
Judges Mark A. Barnett and Claire R. Kelly noted that the administration failed to demonstrate the statutory requirements needed to invoke such emergency tariff powers, stating the proclamation did not establish that the necessary conditions had been satisfied.
Limits of Executive Authority Highlighted
The ruling underscored a key distinction between “balance-of-payments deficits” and broader trade or current account deficits, the latter being the basis of the administration’s justification.
“Rather than identifying ‘balance-of-payments deficits’ as intended, the proclamation relies upon current account deficits and a large trade gap,” the bench observed, warning that accepting such reasoning would effectively hand presidents unchecked tariff powers.
The judges further cautioned that such an expansive interpretation could trigger constitutional concerns under the non-delegation doctrine, which limits how much authority Congress can transfer to the executive branch.
However, Judge Timothy Stanceu dissented, arguing that courts should avoid second-guessing the President’s economic judgment and should not narrowly interpret how such deficits are measured.
The case was brought by importers, including Burlap and Barrel and toy firm Basic Fun, along with the State of Washington. Claims by several other states were dismissed on procedural grounds.
Policy Under Pressure
The tariffs, introduced in February, came after an earlier attempt by the Trump administration to impose duties under emergency powers was struck down by the Supreme Court of the United States.
Section 122 had been presented as an alternative route, allowing temporary import surcharges of up to 15 per cent for 150 days. However, the court found the administration’s reliance on broader economic indicators fell outside the scope envisioned by Congress.
The decision is expected to be appealed to the US Court of Appeals for the Federal Circuit and could ultimately return to the Supreme Court, setting the stage for a prolonged legal confrontation.
The ruling adds to mounting scrutiny over the use of executive authority in trade matters. The judgment not only disrupts a key pillar of Trump’s trade strategy but also reinforces judicial checks on presidential authority, potentially reshaping how future administrations approach economic policy tools.