Financial markets cheered the ruling. The US dollar rallied following the court’s order, surging against currencies such as the euro, yen and the Swiss franc in particular. Wall Street futures rose and equities across Asia also rose.
The ruling, if it stands, blows a giant hole through Trump’s strategy to use steep tariffs to wring concessions from trading partners, draw manufacturing jobs back to US shores and shrink a $US1.2 trillion ($1.9 trillion) US goods trade deficit, which were among his key campaign promises.
Donald Trump on “Liberation Day”.Credit: Getty Images
Without the instant leverage provided by the tariffs of 10 per cent to 54 per cent that Trump declared under the International Emergency Economic Powers Act (IEEPA) – which is meant to address “unusual and extraordinary” threats during a national emergency – the Trump administration would have to take a slower approach under other trade laws to back its tariff threats.
The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Centre on behalf of five small US businesses that import goods from countries targeted by the duties and the other by 13 US states.
The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, have said the tariffs will hurt their ability to do business.
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“There is no question here of narrowly tailored relief; if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all,” the trade court wrote in its decision.
At least five other legal challenges to the tariffs are pending.
Oregon Attorney General Dan Rayfield, a Democrat whose office is leading the states’ lawsuit, called Trump’s tariffs unlawful, reckless and economically devastating.
“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” Rayfield said in a statement.
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Trump has claimed broad authority to set tariffs under IEEPA, which has historically been used to impose sanctions on enemies of the US or freeze their assets. Trump is the first US president to use it to impose tariffs.
The Justice Department has said the lawsuits should be dismissed because the plaintiffs have not been harmed by tariffs that they have not yet paid, and because only Congress, not private businesses, can challenge a national emergency declared by the president under IEEPA.
In imposing the tariffs in early April, Trump called the trade deficit a national emergency that justified his 10 per cent across-the-board tariff on all imports, with higher rates for countries with that the US has the largest trade deficits, particularly China.
Many of those country-specific tariffs were paused a week later. The Trump administration on May 12 said it was also temporarily reducing the steepest tariffs on China while working on a longer-term trade deal. Both countries agreed to cut tariffs on each other for at least 90 days.
Reuters, AP
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