A U.S. trade court has ruled that President Trump’s use of emergency powers to impose sweeping tariffs was unlawful, dealing a blow to his trade strategy. The administration has appealed the decision, which could impact ongoing trade talks with 18 countries.
The Trump administration filed an appeal on Wednesday against a U.S. federal court ruling that blocked most of the President’s broad import tariffs from taking effect. According to the court filing, “Notice is hereby given that defendants appeal to the United States Court of Appeals for the Federal Circuit from the Court’s opinion and final judgment of May 28, 2025.”
Court declares tariffs illegal
A panel of judges from the U.S. Court of International Trade ruled that President Donald Trump lacked “unbounded authority” to impose tariffs on imports from nearly every country. The ruling marks a significant early setback to Trump’s tariff policy, which has been central to his administration’s approach to trade negotiations. The judges determined that many of the tariffs were “illegally” imposed, addressing lawsuits filed by both businesses and state governments.
Trump’s reliance on the 1977 International Emergency Economic Powers Act (IEEPA) to enforce tariffs came under legal scrutiny. As noted by the New York Times, this marked the first time a president used IEEPA—a law traditionally applied to sanctions and embargoes—for tariff imposition. Trump cited the law to justify tariffs on goods from countries such as Canada and Mexico, attributing their trade practices to the inflow of fentanyl into the U.S.
The court found that the President’s tariffs “exceed any authority granted” under IEEPA. Although the ruling did not affect tariffs imposed under other trade laws—such as those targeting steel, aluminum, cars, or potential tariffs on semiconductors and pharmaceuticals—it declared the IEEPA-based tariffs unlawful. The Trump administration now has 10 days to begin phasing out the tariffs through formal channels, although an immediate appeal has been filed.
Business impact and legal response
The decision could weaken Trump’s leverage in ongoing trade negotiations with about 18 countries, where the threat of tariffs had been a key bargaining tool. Officials had previously warned that such a ruling could hinder those talks. The tariffs in question, ranging from 10% to 54%, targeted countries with significant trade surpluses with the U.S., especially China.
Two lawsuits prompted the decision—one from five small businesses and another from 13 U.S. states. The plaintiffs, including a wine importer and an educational kit manufacturer, argued that the tariffs would damage their operations.
White House spokesperson Kush Desai stated, “It is not for unelected judges to decide how to address a national emergency.” He argued that the court disregarded the economic harm caused by U.S. trade deficits. Meanwhile, the Justice Department maintained that only Congress has the authority to challenge a national emergency and that the businesses had not yet paid the tariffs.
Markets react positively
Markets responded positively to the court’s ruling. The U.S. dollar strengthened, and stock markets in both Asia and the U.S. posted gains. Indian markets also opened higher on Thursday, influenced by global optimism. The Nifty 50 rose 0.29% to 24,825.10, and the BSE Sensex climbed 0.34% to 81,591.03. Midcap and smallcap stocks also saw gains of about 0.5%.
Investor sentiment improved on hopes that the administration might scale back from the steepest tariff levels. The ruling dampened gold prices as risk appetite returned and was further supported by strong earnings and a positive revenue forecast from Nvidia.
