“Federal Court Strikes Down Trump’s Global Tariff Rule: What It Means for U.S. Trade Policy”

On May 28, 2025, the U.S. Court of International Trade delivered a landmark ruling in V.O.S. Selections, Inc. v. United States, declaring that former President Donald Trump exceeded his authority by imposing sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA). This decision invalidated the so-called “Liberation Day” tariffs, which had levied a 10% baseline duty on most imports and higher rates on goods from countries like China, Mexico, and Canada.(Wikipedia, The Economic Times)

Legal Basis and Court’s Reasoning

The court unanimously found that the IEEPA did not authorize the president to impose such broad tariffs based on trade deficits, as these do not constitute an “unusual and extraordinary threat” required under the act. The judges emphasized that the power to regulate commerce lies with Congress, and the executive branch cannot unilaterally impose tariffs without clear legislative authorization. (Wikipedia)

Implications for Trade Policy

This ruling significantly impacts the Trump administration’s trade strategy, undermining its leverage in ongoing negotiations with countries like the EU, China, and the UK. While the administration plans to appeal, the court’s decision reinforces the constitutional principle of separation of powers and limits the executive’s ability to use emergency powers for trade policy. (MarketWatch)

Market Reactions

Financial markets responded positively to the ruling, with U.S. stock futures surging and international markets rallying. Investors viewed the decision as a move toward more predictable trade policies and a reduction in global trade tensions. (MarketWatch)

Conclusion

The court’s decision marks a pivotal moment in U.S. trade policy, reaffirming the role of Congress in regulating commerce and setting a precedent for the limits of executive power under the IEEPA. As the legal process continues, the outcome will have lasting effects on the balance of power between the legislative and executive branches in shaping trade policy.(Wikipedia)

• MarketWatch
• The Times of India
• Barron’s