US court blocks Trump's tariffs, rules president exceeded his authority
Companies of all sizes have been whipsawed by the president's swift imposition of tariffs and sudden reversals as they seek to manage supply chains, production, staffing and prices.
A White House spokesperson, Kush Desai, said US trade deficits with other countries constituted 'a national emergency that has decimated American communities, left our workers behind, and weakened our defence industrial base – facts that the court did not dispute'.
'It is not for unelected judges to decide how to properly address a national emergency,' Desai said in a statement.
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, along with equities across Asia.
The ruling, if it stands, blows a giant hole through Trump's strategy to use steep tariffs to wring concessions from trading partners. It creates deep uncertainty around multiple simultaneous negotiations with the European Union, China and many other countries.
However, analysts at Goldman Sachs noted the order does not block sector-specific levies and there were other legal avenues for Trump to impose across-the-board and country-specific tariffs.
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'This ruling represents a setback for the administration's tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners,' analyst Alec Phillips wrote in a note.
Trump has promised Americans the tariffs would draw manufacturing jobs back to US shores and shrink a $US1.2 trillion ($1.9 trillion) US goods trade deficit, which were among his central campaign promises.
Without the instant leverage provided by tariffs, the Trump administration would have to find new forms of leverage or take a slower approach to negotiations with trading partners.
The ruling came in a pair of lawsuits, one filed by the non-partisan 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.
'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.
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'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 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 tariffs on all imports, with higher rates for countries with which the US has the largest trade deficits, particularly China.
The country-specific tariff rates were paused for 90 days a week later, though the baseline 10 per cent duty was put in place for most nations. 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.
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