In a landmark decision on May 28, 2025, the U.S. Court of International Trade ruled that former President Donald Trump exceeded his authority by imposing sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). The court’s unanimous decision emphasized that only Congress holds the constitutional power to regulate international commerce, potentially leading to the refund of approximately $10 billion in tariffs collected since April 2, including $3.5 billion to China alone.
The Court’s Ruling: A Constitutional Reaffirmation
The case, V.O.S. Selections, Inc. v. United States, was initiated by small business owners and supported by the Liberty Justice Center. The plaintiffs contended that the tariffs imposed under the IEEPA were an overreach of executive power, as trade deficits did not constitute the “unusual and extraordinary threat” required by the statute. The three-judge panel unanimously agreed, stating that the IEEPA does not authorize the president to impose such broad tariffs without congressional approval.
The court’s decision underscored the importance of the nondelegation doctrine and the major questions doctrine, reinforcing the constitutional limits on executive action in trade policy. It permanently enjoined the government from enforcing the challenged tariffs and ordered U.S. Customs and Border Protection to cease collection of duties imposed under the executive order.
Economic and Political Implications
Financial Markets React
The ruling had immediate effects on financial markets. U.S. equity futures and major tech stocks saw notable gains, with companies like Nvidia experiencing a surge in stock value. The U.S. dollar also strengthened, reflecting investor optimism about the potential easing of trade tensions.
Impact on Small Businesses
Small businesses, significantly affected by the tariffs, welcomed the court’s decision. Victor and Chloe Schwartz of V.O.S. Selections highlighted the damage to sales and operations due to increased import costs and market uncertainty. The ruling offers a potential reprieve for such businesses, with the possibility of refunds on past tariffs paid.
Legislative Response: The Trade Review Act
In response to concerns over executive overreach in trade policy, bipartisan efforts have led to the introduction of the Trade Review Act of 2025. This proposed legislation aims to reassert Congressional authority over trade decisions by requiring the President to notify Congress of any new tariffs and obtain approval for them to remain in effect beyond 60 days. While the bill has garnered support across party lines, it faces opposition from the White House, including a veto threat from President Trump.
The Road Ahead: Appeals and Global Repercussions
The Trump administration has filed an appeal against the court’s decision, signaling a continued legal battle over the extent of executive power in trade matters. The outcome of this appeal could have far-reaching implications for U.S. trade policy and the balance of power between the executive and legislative branches.
Internationally, the ruling may influence ongoing trade negotiations and relationships. Countries affected by the tariffs, such as China, Canada, and Mexico, may reassess their negotiating stances in light of the court’s decision. The potential for refunds and the invalidation of tariffs could also impact global trade dynamics and economic strategies.
Conclusion
The U.S. Court of International Trade’s decision to strike down President Trump’s “Liberation Day” tariffs marks a significant reaffirmation of constitutional principles, emphasizing the separation of powers and the role of Congress in regulating international commerce. As the legal and political processes unfold, the ruling serves as a pivotal moment in the ongoing discourse on executive authority and trade policy in the United States.
