Washington. A federal court in New York dealt a major blow to former President Donald Trump’s trade agenda Wednesday, blocking his sweeping plan to impose steep tariffs on imports from nearly every country.

A three-judge panel from the US Court of International Trade ruled that Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act (IEEPA) to declare a national emergency and justify the tariffs.

The levies marked a departure from decades of US trade policy. They disrupted global commerce, unsettled financial markets, and raised fears of inflation and a global recession.

The trade court, which has jurisdiction over civil cases involving international trade, said its decision could be appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, and potentially to the Supreme Court, where many expect legal challenges to end up.

Which tariffs did the court block?
The ruling blocks tariffs Trump imposed last month on nearly all US trading partners, as well as earlier levies on China, Mexico, and Canada.

On April 2, Trump introduced so-called “reciprocal tariffs” of up to 50 percent on countries with which the US had a trade deficit, and a 10 percent baseline tariff on most other countries. He later suspended the reciprocal tariffs for 90 days to allow time for negotiations, but left the baseline tariffs in place.

Trump claimed he had the authority to act unilaterally under IEEPA by declaring America’s long-standing trade deficits a “national emergency.”

In February, he had also invoked IEEPA to justify tariffs on Canada, Mexico, and China, citing illegal immigration and drug trafficking across the southern border as part of that emergency declaration.

While the US Constitution grants Congress the authority to set taxes, including tariffs, lawmakers over the years have delegated significant powers to the executive branch. Trump aggressively pushed those boundaries.

The tariffs are the subject of at least seven lawsuits. In Wednesday’s ruling, the trade court consolidated two of the cases: one brought by five small businesses and another by 12 US states.

The decision does not affect other Trump-era tariffs, such as those on foreign steel, aluminum, and autos, which were imposed under a separate law requiring a Commerce Department investigation.

Why did the court rule against Trump?
The Trump administration cited precedent from the Nixon era, when courts upheld President Richard Nixon’s emergency use of tariffs during the 1971 economic crisis after the US decoupled the dollar from gold. Nixon’s administration used the 1917 Trading With the Enemy Act, which later informed parts of IEEPA.

But the court found that Trump’s broad use of IEEPA far exceeded what the law allows. It also determined that the tariffs did little to resolve the issues they targeted. In their filing, the states argued that chronic US trade deficits—ongoing for 49 years—do not constitute a sudden national emergency.

What’s next for Trump’s trade agenda?
Wendy Cutler, a former US trade negotiator and vice president at the Asia Society Policy Institute, said the ruling throws Trump’s trade strategy “into turmoil.”

“Partners negotiating hard during the 90-day tariff pause period may now delay further concessions until there’s more legal clarity,” she said.

Companies, meanwhile, may scramble to adjust their supply chains, speeding up shipments in case the tariffs are reinstated on appeal.

The court noted Trump still holds limited authority to impose tariffs under the Trade Act of 1974. That law allows a maximum 15 percent tariff for up to 150 days on countries with significant trade deficits, but it falls far short of what Trump attempted under IEEPA.

“For now, the ruling destroys the Trump administration’s rationale for using emergency powers to impose tariffs,” said Eswar Prasad, a trade policy professor at Cornell University. “It makes clear that the sweeping tariffs imposed unilaterally by Trump represent an overreach of executive power.”