By Vanguard Staff
WASHINGTON — A panel of federal judges has struck down a centerpiece of President Donald Trump’s economic policy, ruling that he unlawfully invoked emergency powers to impose sweeping tariffs on imports from around the world.
The ruling from the U.S. Court of International Trade delivers a resounding blow to Trump’s expansive use of the International Emergency Economic Powers Act, or IEEPA, and halts enforcement of the tariffs, which have sparked economic volatility and diplomatic tension since they were first imposed earlier this year.
The three-judge panel concluded that IEEPA, a statute enacted in 1977 primarily to authorize sanctions and trade restrictions during national emergencies, does not authorize the president to unilaterally impose tariffs. The ruling orders a permanent injunction and gives the federal government up to 10 days to begin winding down tariff enforcement.
In a statement issued on Wednesday, California Gov. Gavin Newsom called the court’s decision a victory for American families, constitutional separation of powers and economic stability.
“Like we said when we filed our lawsuit: These tariffs are illegal, full stop,” Newsom said. “The court agreed today that Donald Trump overstepped his authority with his unlawful tariffs, which have created chaos and hurt American families and businesses.”
The ruling aligns with the legal arguments advanced in April by Newsom and California Attorney General Rob Bonta in a separate lawsuit challenging the same tariffs.
In that case, the state of California argued that Trump’s actions created immediate and irreparable harm to the state’s economy, particularly its ports, exporters and trade-dependent industries. California also joined 11 other states in an amicus brief in Oregon v. Trump, the lead case decided this week by the trade court.
In a statement following the ruling, Bonta praised the decision and reaffirmed California’s commitment to defending legal norms in the face of executive overreach.
“The Trump administration’s illegal tariffs harm businesses, consumers and states across the nation,” Bonta said. “The Court of International Trade has agreed with our sister states and with California and permanently halted the president’s illegal tariffs — IEEPA does not authorize the Trump administration to impose these tariffs. We are pleased with the court’s decision in this case and are proud to have supported our sister states’ arguments.”
The lawsuit challenged Trump’s aggressive use of emergency authority to reshape U.S. trade relationships. In recent months, Trump had declared multiple national emergencies — including over drug trafficking and trade deficits — to justify imposing a 10% universal tariff on all imports, a 145% tariff on Chinese goods and “reciprocal” tariffs of up to 50% on nearly 90 countries, including U.S. allies and major trading partners such as Canada, Mexico, Germany, and Vietnam.
The court found that this sweeping use of IEEPA far exceeded the law’s intended scope. Judge Jane Restani, writing for the panel, expressed concern over the administration’s claim of unilateral authority to rewrite trade rules.
“It may be a very dandy plan, but it has to meet the statute,” Restani said during oral arguments, rebuking a Justice Department attorney who insisted that the court lacked jurisdiction to second-guess the president’s emergency declarations.
California’s filings noted that no previous president had used IEEPA to impose tariffs in the nearly 50 years since its passage. The law, they argued, contains no reference to tariffs, duties or taxes and was never intended as a tool for economic nationalism.
“The word ‘tariff’ does not appear in the statute at all,” the state wrote in its federal complaint, adding that Trump’s interpretation of the law would allow him to “impose tariffs on any country at any rate at any time, simply by declaring a national emergency” — a move they warned was unconstitutional and economically destabilizing.
California, the world’s fourth-largest economy and America’s top trading state, claimed it had been especially harmed by the tariffs. More than $675 billion in merchandise trade flows through its ports each year, and retaliatory measures by China and other nations threatened key industries such as agriculture, technology and entertainment.
According to a Yale University Budget Lab analysis cited in California’s filings, the tariffs were projected to shrink the U.S. economy by $100 billion annually and had already erased more than $6.6 trillion in market capitalization in the days following Trump’s April 2 “Liberation Day” announcement, when he imposed the universal and reciprocal tariffs.
In addition to direct costs, the court said Trump’s tariffs undermined long-established legal frameworks for trade. Trump had previously bypassed existing tariff laws that require process, notice and congressional oversight, including the Trade Expansion Act and the Trade Act of 1974. Instead, he claimed that IEEPA — which was designed for emergencies such as nuclear proliferation or terrorism — gave him sweeping discretion to tax imports unilaterally.
While the ruling does not affect tariffs imposed under separate legal authorities — such as those on steel and aluminum — it significantly curtails Trump’s ability to use emergency declarations as a trade weapon moving forward. It also complicates ongoing negotiations with 18 countries where Trump had hoped to use tariffs as leverage for new trade deals.
Everett Eissenstat, a former Trump administration economic adviser and now a partner at the law firm Squire Patton Boggs, said the ruling marks a major inflection point.
“This decision dramatically impacts near-term dynamics surrounding the president’s tariff and trade agenda,” Eissenstat said in an interview with the NY Times. “The story is far from over, but today marks a significant chapter in its evolution.”
The Trump administration has already filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit and is expected to seek an emergency stay of the injunction.
White House spokesman Kush Desai denounced the ruling as judicial overreach, calling the tariffs a necessary response to what he described as decades of unfair trade practices.
“It is not for unelected judges to decide how to properly address a national emergency,” Desai said. “President Trump will use every lever of executive power to protect American workers.”
Legal experts, however, say the case reaffirms constitutional limits on executive power. In a nod to the landmark Youngstown Sheet & Tube Co. v. Sawyer decision, which struck down President Harry Truman’s seizure of steel mills during the Korean War, the trade court emphasized that the president’s authority must stem from either the Constitution or an act of Congress.
Gov. Newsom echoed that theme in his remarks.
“This is not about trade strength — it’s about constitutional limits,” he said. “No president should be allowed to declare an emergency just to rewrite economic policy by fiat.”
