EditU.S. trade court blocks Trump’s sweeping tariffs, undermining his trade strategy
The decision complicates ongoing trade negotiations with the European Union, China, and other partners
In a landmark ruling on 28 May, the U.S. Court of International Trade issued a permanent injunction against President Donald Trump’s blanket tariffs on imports, declaring that he exceeded his authority under the International Emergency Economic Powers Act (IEEPA).
The decision, which invalidates tariff orders issued since January 2025, not only disrupts Trump’s aggressive trade policy but also complicates ongoing trade negotiations with the European Union, China, and other partners, raising questions about U.S. leverage and transatlantic economic relations.
Court ruling and legal implications
The Manhattan-based court, in a unanimous decision by a three-judge panel, ruled that the U.S. Constitution grants Congress exclusive authority over international commerce, which Trump’s use of IEEPA to impose across-the-board tariffs violated. The judges clarified that their decision was not about the “wisdom or effectiveness” of Trump’s tariffs but their illegality under federal law, ordering the administration to issue new orders complying with the injunction within 10 days. The ruling does not affect industry-specific tariffs on automobiles, steel, and aluminium, which rely on a different statute.
The Trump administration swiftly filed an appeal, questioning the court’s authority, with the case likely headed to the U.S. Court of Appeals for the Federal Circuit and potentially the Supreme Court. The Justice Department argued that the lawsuits – filed by the Liberty Justice Center on behalf of five small U.S. businesses and 12 U.S. states – should be dismissed, claiming plaintiffs have not yet suffered harm from unpaid tariffs and that only Congress can challenge an IEEPA-based emergency declaration.
Impact on U.S. trade strategy
Trump’s tariffs, ranging from 10% to 54%, were a cornerstone of his strategy to reduce the $1.2 trillion U.S. goods trade deficit and repatriate manufacturing jobs. By invoking IEEPA, a law traditionally used for sanctions or asset freezes, Trump sought to bypass Congressional oversight, framing the trade deficit as a national emergency. The court’s ruling dismantles this approach, stripping the administration of a key negotiating tool and forcing a reevaluation of how to pressure trading partners like the EU and China.
The decision creates significant uncertainty for U.S. trade policy. Without the immediate leverage of broad tariffs, the administration may struggle to extract concessions, potentially shifting to slower diplomatic negotiations or alternative measures like quotas or targeted sanctions.
“Trump’s tariff strategy was a blunt instrument meant to signal strength, but this ruling exposes its legal fragility and limits his ability to act unilaterally,” said trade expert Chad Bown of the Peterson Institute for International Economics (Peterson Institute, 28 May).
Impact on EU-U.S. relations
The ruling has profound implications for U.S.-EU trade relations, which have been strained by Trump’s tariffs and threats of escalation. The EU, a major U.S. trading partner with a $209 billion goods trade deficit in 2024, had faced 10% tariffs on all imports, with higher rates paused in May 2025 as part of a 90-day tariff reduction agreement. EU officials welcomed the court’s decision, with European Commission President Ursula von der Leyen stating, “This ruling reinforces the need for rules-based trade and strengthens our resolve to negotiate fair agreements with the U.S.”
However, the EU remains cautious, as Trump could pivot to other measures, such as reinstating industry-specific tariffs or leveraging non-tariff barriers, to pressure Brussels. The EU has prepared retaliatory measures, including potential tariffs on U.S. exports like agricultural goods and whiskey, which could escalate tensions.
“The EU sees this as a chance to push for de-escalation, but Trump’s unpredictability means we’re not out of the woods,” said Cecilia Malmström, former EU trade commissioner.
he ruling also complicates ongoing U.S.-EU talks on critical minerals and green technology, where tariffs had been a sticking point.
Domestic and global reactions
Domestically, the ruling drew sharp reactions. Oregon Attorney General Dan Rayfield, leading the states’ lawsuit, called Trump’s tariffs “unlawful, reckless, and economically devastating,” arguing they harmed businesses and consumers. The plaintiff businesses, including a New York wine importer and a Virginia educational kit manufacturer, reported supply chain disruptions and price hikes due to the tariffs. Conversely, White House spokesperson Kush Desai defended the tariffs, claiming the trade deficit has “decimated American communities” and weakened national security, dismissing the court as “unelected judges”.
Financial markets reacted positively, with the U.S. dollar rallying against the euro and yen, and Wall Street futures rising as investors anticipated reduced trade disruptions,
Globally, the ruling was seen as a setback for Trump’s confrontational trade posture. China, which faced tariffs as high as 54% before the 12 May pause, signaled openness to further talks but warned against new barriers. The World Trade Organization, long critical of unilateral tariffs, noted that the decision aligns with international trade norms.
Broader implications for EU-U.S. relations
The court’s decision exposes the fragility of Trump’s unilateral trade strategy, particularly in the context of EU-U.S. relations, which are already strained by disagreements over Ukraine, NATO funding, and climate policies. The EU, keen to stabilise transatlantic ties, may use this opportunity to push for a broader trade agreement, but Trump’s appeal and potential alternative measures could prolong uncertainty. The ruling also strengthens the EU’s position in advocating for multilateral trade frameworks, contrasting with Trump’s protectionist stance.
Moreover, the decision highlights tensions between U.S. domestic institutions and Trump’s executive actions, potentially emboldening the EU to challenge other U.S. policies through international forums like the WTO. However, if the appeal overturns the ruling, Trump could double down on tariffs, risking a transatlantic trade war that could cost the EU €150 billion annually in lost exports.
Sources: Reuters, Bloomberg, The Financial Times,EU Commission press releases, WTO statements
Caption: US President Donald Trump speaks during the swearing-in ceremony for Jeanine Pirro, as interim US Attorney for the District of Columbia, in the Oval Office at the White House in Washington, DC, USA, 28 May 2025. [EPA-EFE/CHRIS KLEPONIS / POOL]
Updated: May 29, 2025 - 07:26
