A United States trade court has blocked Donald Trump's "Liberation Day" tariffs from going into effect, ruling that the president overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the US than they buy.
The Manhattan-based Court of International Trade said the US constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the US economy.
"The court 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 [federal law] does not allow it," a three-judge panel said in the decision.
The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center 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.
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.
Trump has claimed broad authority to set tariffs under the International Emergency Economic Powers Act (IEEPA), which is meant to address "unusual and extraordinary" threats during a national emergency.
The law 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 tariffs on all imports, with higher rates for countries with which the US has the largest trade deficits, particularly China.
Many of those country-specific tariffs were subsequently paused. The Trump administration announced on 12 May that it would also temporarily reduce 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.
Trump's on-and-off-again tariffs, which he has said are intended to restore US manufacturing capability, have shocked US financial markets.
The US dollar rose against both the Swiss franc, a traditional currency safe-haven, and the Japanese yen following the court decision.
Australia responds to ruling
Australian Trade Minister Don Farrell said the government would study the ruling closely, noting the duties might be subject to further legal proceedings.
"The Albanese government has been consistent in the view that these tariffs on Australian imports into the US are unjustified," he said.
"We will continue to engage and strongly advocate for the removal of tariffs.
The trade court's decision can be appealed to the US Court of Appeals for the Federal Circuit in Washington, and ultimately the US Supreme Court.
