A US court has struck down President Donald Trump’s reciprocal tariffs, ruling that he exceeded his authority under emergency economic powers
In a blow to Donald Trump’s economic agenda, a US federal court has struck down his reciprocal tariffs, or 'Liberation Day tariffs' that he imposed by invoking emergency economic powers law. The US Court of International Trade, on Wednesday, ruled that the International Emergency Economic Powers Act does not actually give the president the power to unilaterally implement the sweeping duties.
Although the counsel for the government argued that the purpose of these tariffs was to create pressure on some countries to change bad behaviors that are hurting Americans, the tariff orders should “deal with” that specific problem, not create “leverage” ostensibly to do so, the ruling said.
The court said it does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage. “That use is impermissible not because it is unwise or ineffective, but because § 1701 does not allow it,” the ruling said.
The court blocked the tariff with immediate effect saying, “The challenged Tariff Orders will be vacated and their operation permanently enjoined.” It further stated, “There is no question here of narrowly tailored relief.”
The ruling came in response to two lawsuits — one from the nonpartisan Liberty Justice Center representing five small US businesses, and another from a group of 13 US states led by Oregon.
The Trump administration appealed the Wednesday’s ruling to the US Court of Appeals for the Federal Circuit.
Usually, imposing tariffs would have required an approval from the congress, but Trump sidestepped the process by invoking the International Emergency Economic Powers Act, and acted unilaterally. But the court’s ruling proved once again that a president cannot just act on his own whims.
Existing tariffs on products such as aluminum and steel remain unaffected by the ruling, as they were not imposed under the emergency powers law.
US stock futures jumped and the dollar gained against safe-haven currencies such as the yen and Swiss franc. The Dow futures were up 550 points, while the S&P 500 and Nasdaq futures were up 95 points and 450 points, respectively, CNBC TV-18 reported. The futures also received a boost from Nvidia's better than expected quarterly results. The US Dollar Index also rose above the mark of 100.
Asian markets also traded higher today during the early trade as investors cheered the ruling by the US court. Although Nifty might see some volatility in the day due to the expiry day, it to opened higher today tracking global cues. At 09:15 AM, the 50-stock index was trading 0.6% higher from its previous close.