U.S. Court Blocks Trump Tariffs, Analysts Skeptical

Author: Lider/Hina

June 4, 2025

Donald Trump / Image by: foto Shutterstock

A U.S. court has blocked the implementation of tariffs by President Donald Trump, which he refers to as Liberation Day, ruling that he has exceeded his authority.

The U.S. Court of International Trade based in Manhattan stated that the U.S. Constitution grants Congress exclusive powers to regulate trade with other countries, which are not overridden by the president’s extraordinary powers to protect the U.S. economy.

– The court does not make a decision on the wisdom or potential effectiveness of the president’s use of tariffs as a lever. That use is impermissible not because it is unreasonable or ineffective, but because (federal law) does not allow it, the three-judge panel stated in its ruling.

The ruling was made in two lawsuits, one filed by the Liberty Justice Center on behalf of five small U.S. companies that import goods from countries subject to the tariffs, and the other filed by 13 U.S. states.

The companies stated that the tariffs would harm their ability to do business. At least five other lawsuits remain unresolved.

Oregon Attorney General Dan Rayfield, a Democrat whose office is leading the states’ lawsuit, called Trump’s tariffs illegal, reckless, and economically devastating.

– This ruling reaffirms that our laws matter and that trade decisions cannot be made at the president’s whim, Rayfield said in a statement.

Trump claims he has broad authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which is intended to address “extraordinary” threats during a national emergency.

Historically, the law has been used to impose sanctions on U.S. enemies or freeze their assets. Trump is the first U.S. president to use it to impose tariffs.

By introducing tariffs in early April, Trump called the trade deficit a national emergency, justifying his 10 percent general tariff on all imports, with higher rates for countries with which the United States has the largest trade deficits, particularly China.

Many of those country-specific tariffs were paused a week later.

On Friday, Trump stated that he was dissatisfied with the pace of trade negotiations with the EU and threatened to impose a 50 percent tariff on all goods from the EU starting June 1. However, he later agreed to extend the deadline for trade negotiations to July 9.

The Trump administration stated it would appeal the ruling.

Options on the Table

Economists from Goldman Sachs noted that the White House has several tools at its disposal to ensure that this is only a temporary problem, CNBC reports.

– This ruling represents a setback for the administration’s tariff plans and increases uncertainty, but it may not change the ultimate outcome for most major U.S. trading partners, Goldman Sachs analysts said in their analytical note.

– For now, we expect the Trump administration to find other ways to impose tariffs, they added.

The Wall Street bank stated that the ruling blocks the basic 10 percent tariff that Trump imposed on most imports, as well as additional tariffs on China, Canada, and Mexico – but not sector-specific tariffs, such as those on steel, aluminum, and automobiles.

However, according to Goldman, the Trump administration still has other legal avenues to impose tariffs. This includes Section 122 of the Trade Act of 1974, Section 301, and Section 338 of the Trade Act of 1930.

Section 122 does not require a formal investigation and could therefore be one of the quickest ways to circumvent the judicial obstacle.

– The administration could quickly replace the universal 10 percent tariff with a similar tariff of up to 15 percent under Section 122, Goldman analysts said. They noted, however, that such a measure could last a maximum of 150 days, after which a decision from Congress is required.

Trump could also quickly initiate investigations under Section 301 against key U.S. trading partners, thereby establishing a bureaucratic basis for tariffs, although Goldman notes that this process would take at least a few weeks.

Tariffs under Section 232, which are already in place for steel, aluminum, and automobile imports, could also be expanded to other sectors, while Section 338 allows the president to impose tariffs of up to 50 percent on imports from countries that discriminate against the U.S.

Goldman noted that this last section has not been used so far.

What About the Supreme Court?

James Ransdell, a partner at the law firm Cassidy Levy Kent, stated that the court opinion represents the first of many unresolved lawsuits — and the first substantive decision by a federal court that truly addresses the essence of the plaintiffs’ lawsuit, CNBC reports.

Ransdell said that the speed with which the Trump administration filed the appeal is “very unusual” and suggests that the government may be working all night to prepare a request for an emergency stay of the ruling’s implementation.

He added that it is “certainly possible” that the Supreme Court will ultimately make a final decision.

– There are not many precedents regarding this specific legal provision and similar actions by the president, so the Supreme Court may be interested in considering the case, Ransdell told CNBC’s “The China Connection.”

Steven Blitz, chief U.S. economist at TS Lombard, stated that Trump ‘very well’ understands how to use the courts to buy time.

– The first thing he will likely do is file an emergency appeal to the Supreme Court… seeking a ruling that would allow him to keep the tariffs in place while the appeal process is ongoing, Blitz said on Thursday.

– This imperial executive order had to eventually face the courts… The difference between a monarchy and a constitutional democracy is the legal system, he added.