A federal court in New York has blocked most of the tariffs imposed by former U.S. President Donald Trump on imports from various countries. The court ruled that Trump exceeded his authority by invoking the International Emergency Economic Powers Act (IEEPA). This act was used to impose a universal 10% tariff on almost all imports, with additional tariffs on goods from China, Mexico, and Canada.
The court emphasized that the U.S. Constitution grants Congress the exclusive authority to regulate international trade, not the president. The ruling stated that federal law does not allow the president to independently make such decisions. The decision has national implications, permanently prohibiting the implementation of the disputed tariffs.
The Trump administration has announced an appeal, keeping the legal process open. Global financial markets reacted positively to the news, with stock markets rising and the U.S. dollar strengthening. However, analysts warn that long-term uncertainty about the tariffs' fate could negatively impact business operations and investment.
Trump's tariff policy disrupted global supply chains and contributed to the International Monetary Fund's (IMF) lowered growth forecasts for the U.S., China, and most global economies. The IMF now projects global growth at 2.8% in 2025, significantly lower than previous expectations. Inflation could decrease more slowly due to trade tensions and tariffs.
The lawsuit was filed by 12 states and several small U.S. businesses, arguing that the tariffs were unconstitutional and harmful to the economy. The court concluded that if the tariffs are illegal for the plaintiffs, they are illegal for everyone. Despite the ruling, the Trump administration is exploring legal options to circumvent the decision.
While the court nullified tariffs imposed under IEEPA, the administration may continue to apply sector-specific tariffs on automobiles, steel, and aluminum, based on other legal authorities. Trump had also threatened tariffs of 50% on imports from the European Union if negotiations did not progress. The current tariffs of 10% on most products from the EU remain in effect.
This court decision marks a turning point in U.S. trade policy and the global economy. While it brought short-term relief to markets, long-term uncertainty about the future of U.S. tariffs and trade relations persists. Continued legal battles and political tensions could further slow global economic recovery, especially amid lowered growth forecasts and increased inflation.