ANALYSIS: US Court of International Trade has ruled Trump’s Liberation Day tariffs are illegal

COURT RULING

• The Court of International Trade (CIT) determined that President Trump does not hold the authority to introduce the tariff measures he announced via emergency power legislation.


• The ruling was over a handful of small businesses, but the CIT rules that “if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all”. The CIT panel, composed of three judges given the magnitude of the case (one of the judges used to Chair the CIT) concluded that “The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs” and “The challenged Tariff Orders will be vacated and their operation permanently enjoined.”.


• Note, the ruling also blocks measures imposed on Canada, China and Mexico relating to fentanyl.


• The US government is appealing the ruling; White House outlined that it is not for unelected judges to decide how to properly address a national emergency.

MARKET REACTION

• The ruling, which could see Trump’s Liberation Day measures revoked and paid tariffs refunded with interest - pending the appeals process - added to the risk on tone that was already in place after NVIDIA metrics and sparking further fixed income pressure and USD strength.

NEXT STEPS

• The ruling gives the administration 10 days to halt tariff collection relating to Liberation Day measures. However it has no bearing on sectoral tariffs (Section 232).


• The appeal will initially be heard under the Court of Appeals, if that ruling is then appealed it will go to the Supreme Court.


• It is not 100% clear as to what will happen to the Liberation Day measures during the appeals process. However, a former Customs Border Protection Agency official spoke with the BBC and outlined that there will be no change at the border until the appeals process concludes i.e. the Liberation Day tariffs will remain in place until a final decision is reached.


• If the Administration is unsuccessful in its appeal, Goldman Sachs highlights that it is only a temporary setback, as the White House can offset the halted 6.7ppts of levies using other tariff tools to continue advancing its trade agenda.

29 May 2025 - 07:30- ForexGeopolitical- Source: Newsquawk