In a significant blow to President Donald Trump's economic agenda, the U.S. Court of International Trade in New York has ruled that his sweeping global tariffs, including the 'Liberation Day' levies, are illegal. The three-judge panel unanimously decided on May 29, 2025, that Trump had overstepped his authority when imposing these tariffs [1][2][3].

The court rejected Trump's argument that the International Emergency Economic Powers Act of 1977 gave him the power to impose tariffs during times of national emergency. The judges ruled that only Congress has the authority to impose or regulate tariffs [1][5].

The decision affects a wide range of tariffs, including:

The 'Liberation Day' tariffs announced on April 2, 2025A 30% tariff on China25% tariffs on certain goods from Mexico and Canada10% universal tariffs on most of the rest of the world [8]

This ruling has significant implications for global trade. Trump had used tariffs as a tool to threaten both allies and competitors, disrupting global commerce and rattling financial markets [1][6]. The decision could potentially drag the U.S. into a recession and cause prices to rise [5].

Markets reacted positively to the news. In early trading on May 29, futures for the S&P 500 were up 1.6%, while those for the Dow Jones Industrial Average gained 1.3%. Japan's Nikkei 225 index jumped 1.6% [4].

The Trump administration has already announced its intention to appeal the ruling. The case may ultimately reach the Supreme Court, where conservative justices hold a 6-3 majority [5].

This decision comes in response to a lawsuit filed by attorneys general from twelve states and several small American companies. They urged the court to strike down the import taxes, arguing that Trump had exceeded his authority [4].

The ruling could have far-reaching effects on U.S. trade relations. For instance, India may now have an upper hand in negotiating a trade deal with Washington, as America's leverage has been weakened [2].

As the situation develops, businesses and consumers alike are watching closely to see how this legal battle will unfold and what it means for the future of U.S. trade policy [6][8].