A New York-based federal court has temporarily handicapped the Trump administration, removing some of its leverage in trade wars with foreign powers.

A three-judge panel at the U.S. Court of International Trade on Wednesday voided and permanently blocked President Donald Trump's "Liberation Day" 10% baseline tariff on goods imported from most countries as well as his reciprocal tariffs on scores of individual nations.

The court unanimously held that while the president has authority to respond to national emergencies with tariffs, embargoes, and sanctions, the International Emergency Economic Powers Act he invoked "does not authorize the President to impose unbounded tariffs."

'The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law.'

The court suggested that letting Trump impose unbounded tariffs might run afoul of the Constitution's separation of powers, as the Constitution assigns Congress the power to regulate foreign commerce and impose tariffs. Critics have stressed, however, that Congress has over the years delegated much of this authority to the president and the executive branch — authority largely unchallenged until now.

"The Worldwide and Retaliatory Tariffs do not comply with the limitations Congress imposed upon the President's power to respond to balance-of-payments deficits," the court said in its opinion. "The President's assertion of tariff-making authority in the instant case, unbounded as it is by any limitation in duration or scope, exceeds any tariff authority delegated to the President under IEEPA. The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law."

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The decision halts Trump's existing IEEPA tariffs and prevents him from increasing tariffs, including the paused 145% tariff on imports from China and the recently threatened 50% tariffs on imports from the European Union. It also scraps Trump's orders applying 25% duties on Canadian and Mexican products.

The Trump administration immediately appealed the decision.

'The judicial coup is out of control.'

Since the Court of International Trade had effectively resolved two lawsuits before it in a single opinion — a lawsuit brought by the Liberty Justice Center on behalf of several businesses and a lawsuit filed by a gang of blue-state state attorneys general — the government asked the U.S. Court of Appeals for the Federal Circuit to consolidate its appeals.

Jeffrey Schwab, director of litigation at the Liberty Justice Center, said in a statement, "This ruling reaffirms that the president must act within the bounds of the law, and it protects American businesses and consumers from the destabilizing effects of volatile, unilaterally imposed tariffs."

Oregon Attorney General Dan Rayfield, one of the Democrats who fought to axe the tariffs, celebrated the ruling, stating, "President Trump's sweeping tariffs were unlawful, reckless, and economically devastating."

White House deputy chief of staff Stephen Miller noted on X, "The judicial coup is out of control."

Miller added Thursday, "We are living under a judicial tyranny."

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Photographer: Yuki Iwamura/Bloomberg via Getty Images

Regardless of whether the government is successful in its appeal, the Trump administration has other ways of pursuing its desired tariffs, including under Section 122 of the Trade Act of 1974, Section 232 of Trade Expansion Act of 1962, Sections 301 of the 1974 Trade Act, and Section 338 of the Trade Act of 1930.

Alec Phillips, managing director at Goldman Sachs, indicated that the president is authorized under Section 122 to tackle a balance-of-deficit, reported MarketWatch. Since that particular law does not demand a formal investigation or process, Trump could use it to immediately impose tariffs of up to 15%. The downside is that Section 122 tariffs are only good for 150 days.

Alternatively, the administration could apply tariffs under Section 301, although doing so would require investigations to set the stage.

"This would take longer, likely several weeks at a minimum and probably a few months to complete several investigations," said Phillips. "There is no limit on the level or duration of tariffs under Sec. 301."

'We already expect additional sectoral tariffs.'

Michelle Schulz, managing partner at Schulz Trade Law PLLC, told CNBC's "Squawk Box Europe" on Thursday, "We have had section 301 tariffs on Chinese goods even under the previous administration, which were pretty harsh. So I can imagine that the administration will look at these provisions again and see if they can use 232, or 301, or some other mechanism whereby they can enforce the tariffs."

According to Phillips, Section 338 enables Trump to impose tariffs of up to 50% on imports from nations that discriminate against the United States. While an available tool in the president's kit, it has reportedly never been used before.

Finally, Section 232 tariffs — which Trump has used for steel, aluminum, and automobiles and which were unaffected by the court's ruling — can be expanded to cover other sectors.

"We already expect additional sectoral tariffs — pharmaceuticals, semiconductors/electronics, etc. — and uncertainty regarding the IEEPA-based tariffs could lead the White House to put more emphasis on sectoral tariffs, where there is much less legal uncertainty," said Phillips.

Blaze News reached out to the Department of Commerce for comment but did not receive a response by publication.

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