Breaking: U.S. Court Blocks Trump’s “Liberation Day” Tariffs, Propelling Dollar Rally

Introduction

On May 29, 2025, the U.S. Court of International Trade delivered a landmark ruling that temporarily enjoins President Donald Trump’s sweeping “Liberation Day” tariffs—scheduled to take effect April 2—on constitutional grounds. These measures, imposed under the guise of curbing illegal immigration and combating drug trafficking, would have levied 10 percent duties on all imports from countries with which the United States runs trade deficits, and up to 25 percent on specific sectors. Instead, the court found that the president overstepped his authority under both the International Emergency Economic Powers Act (IEEPA) and Article I of the Constitution, which vests Congress with exclusive power over trade and commerce.

This decision crystallizes the tension between executive emergency powers and legislative prerogatives, raising urgent questions about separation of powers, statutory interpretation, and the proper scope of unilateral tariff authority. “The Constitution simply does not countenance a blank check for the president to rewrite trade law on his own,” observed Professor Jane Dalton of Harvard Law School, underscoring the judiciary’s role as a bulwark against executive overreach. 

As financial markets immediately recalibrated—Asian equities rallied, U.S. stock futures climbed, and the U.S. dollar index leapt past 100—the ruling also spotlights the delicate interplay between law and markets. Investors, once fearful of a disruptive tariff regime, now find solace in judicial restraint, even as the Trump administration signals its intent to appeal to the Supreme Court. This article will dissect the legal framework that underpins the decision, trace its historical use and challenges, analyze the current proceedings and viewpoints across the political spectrum, compare it to precedent, and forecast its policy implications for American governance and global trade. We posit that the ruling epitomizes a broader constitutional struggle over unilateral executive power and its economic fallout—a struggle that will define U.S. trade policy for years to come.

Legal and Historical Background

Statutory Authorities and Constitutional Text

1. International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1621–1622
   Enacted in 1977, IEEPA grants the president authority to regulate commerce after declaring a national emergency. Historically used to sanction rogue states, block property, and curb imports from adversarial nations, IEEPA’s reach is nonetheless circumscribed by explicit exceptions and congressional oversight requirements (e.g., periodic reporting, caps on personal travel restrictions). Courts have interpreted IEEPA narrowly, emphasizing that broad economic powers cannot override clear legislative intent.
   
2. Trade Act of 1974, 19 U.S.C. § 2155
   This provision allows presidential action—subject to congressional consultation—in response to unfair trade practices. Unlike IEEPA, it requires a detailed investigation by the U.S. Trade Representative and automatic “fast-track” procedures, ensuring both transparency and legislative check. Trump’s Liberation Day tariffs bypassed these statutory protocols, subverting the Trade Act’s built-in safeguards.
   
3. Constitutional Commerce Clause, Article I, § 8, Cl. 3
   The framers vested “the Congress” with the power “to regulate Commerce with foreign Nations.” The Court of International Trade reaffirmed that unilateral executive proclamations cannot supplant congressional statutes. As the opinion states, “The vesting clause alone demonstrates that the authority to impose tariffs resides with Congress, not the President acting alone.”
   

Historical Use of Emergency Trade Powers

Presidential invocation of emergency trade powers has ranged from Franklin D. Roosevelt’s 1940s embargoes on Japan (rooted in executive orders) to Ronald Reagan’s 1987 earthquake aid embargo in Turkey. Each instance sparked debate over executive latitude and resulted in varying degrees of judicial scrutiny. The 2018 Section 232 steel and aluminum tariffs under President Trump were upheld by the Supreme Court because they were authorized by a specific statute focusing on national security, unlike IEEPA-based tariffs. 

Precedent-Setting Decisions

• Youngstown Sheet & Tube Co. v. Sawyer (1952): The landmark Youngstown decision curtailed President Truman’s seizure of steel mills, establishing a tripartite framework for assessing executive power vis-à-vis Congress (Jackson’s concurrence).
  
• Dames & Moore v. Regan (1981): Validated broad executive authority under IEEPA for certain Iran-related asset transfers, but emphasized the need for explicit congressional acquiescence.
  
• Chevron U.S.A. Inc. v. Natural Resources Defense Council (1984): While not directly on trade, Chevron deference informs how courts review executive interpretations of ambiguous statutes. In the Liberation Day case, ambiguity in IEEPA was resolved against executive extension.
  

These precedents collectively underscore that executive emergency actions must anchor in clear legislative text and remain subject to judicial review—a principle the Court of International Trade reiterated in blocking the Liberation Day tariffs.

Case Status and Legal Proceedings

The case, State of California, et al. v. United States, was filed in the Court of International Trade on May 5, 2025, by a coalition of 12 states and four industry groups challenging the Liberation Day tariffs. Plaintiffs argued that the president lacked statutory authority and that the tariffs would inflict economic harm on key sectors.

On May 29, Judge Anne M. Schoettler issued a preliminary injunction, finding “a substantial likelihood of success on the merits” given the clear language of the IEEPA exceptions and the Commerce Clause. The opinion quotes extensively from the administrative record and amicus briefs, including detailed filings by the U.S. Chamber of Commerce and the Brennan Center for Justice. The court noted that while national emergencies can justify some restrictions, sweeping tariffs on all imports exceed any plausible reading of IEEPA’s text.

The government filed an expedited notice of appeal to the U.S. Court of Appeals for the Federal Circuit, requesting an emergency stay of the injunction. Concurrently, the Solicitor General alerted the Supreme Court to the case’s urgency, hinting at potential certiorari before judgment. A schedule has not yet been set, but experts expect appellate briefing to occur within six weeks.

Viewpoints and Commentary

Progressive / Liberal Perspectives

Progressive legal scholars lambast the tariffs as a “power grab” that undermines both constitutional democracy and international trade norms. “Tariffs of this magnitude, imposed unilaterally, run counter to decades of bipartisan consensus on trade law,” argues Professor Maria Chen of Yale Law School. Civil rights groups like the Economic Policy Institute highlight the tariffs’ disparate impact on working-class consumers who would face higher prices for everyday goods. 

Democratic lawmakers, including Senator Elizabeth Warren, decry the measures as “reckless and legally indefensible,” urging Congress to pass clarifying legislation to prevent future unilateral tariff actions. The Brennan Center’s amicus brief warns that unchecked executive emergency powers threaten civil liberties, drawing parallels to post-9/11 expansions of surveillance authority.

Conservative / Right-Leaning Perspectives

Conversely, conservative commentators contend that swift executive action is vital in addressing trade imbalances and national security threats. “When Congress is paralyzed, the president must act decisively,” asserts Michael Luttig, former federal appeals judge and senior fellow at Heritage Foundation. National security hawks argue that IEEPA was designed exactly for exigent circumstances—such as a flood of fentanyl—where legislative responses are too slow. 

Republican lawmakers like Representative Kevin McCarthy defend the tariffs as necessary leverage in negotiations with China and other trading partners. The Cato Institute’s trade scholars, though generally free-trade advocates, concede that limited, well-targeted tariffs can serve as bargaining chips—though they criticize the blanket scope of the Liberation Day measures.

Comparable or Historical Cases

1. Steel Seizure (1952): Youngstown Sheet & Tube Co. v. Sawyer illustrated the judiciary’s willingness to curtail executive overreach absent congressional authorization. Jackson’s concurrence remains the touchstone for separation-of-powers analysis.
   
2. 1987 Turkey Embargo: Reagan’s embargo on steel imports from Turkey, issued under IEEPA, was litigated but ultimately withdrawn after congressional pushback—underscoring the necessity of legislative buy-in.
   
3. 2018 Section 232 Tariffs: When President Trump imposed steel and aluminum tariffs citing national security, the Supreme Court upheld the move (without opinion) due to explicit statutory grounding in Section 232 of the Trade Expansion Act. Contrastingly, the Liberation Day tariffs lack a parallel statute, making them more vulnerable.
   

These cases reveal a consistent judicial pattern: emergency trade powers must be tethered to clear statutory grants or risk invalidation.

Policy Implications and Forecasting

Short-term, the injunction stabilizes markets by removing the immediate threat of widespread tariffs, boosting investor confidence and re-opening supply chains. However, political volatility persists: an appeal could drag on for months, during which uncertainty may deter business investment.

Long-term, the ruling may spur Congress to revisit and clarify IEEPA’s scope or craft new emergency trade statutes with robust oversight mechanisms. Brookings Institution analysts suggest a bipartisan commission to balance agility and accountability in trade emergencies

On the international stage, allies and adversaries alike will watch closely. The European Union and Japan may leverage this moment to press for WTO reforms, while China could perceive U.S. divided governance as an opportunity in trade negotiations. The decision also raises constitutional questions about future uses of emergency powers in areas such as immigration and climate crises.

Conclusion

The Court of International Trade’s decision to block President Trump’s Liberation Day tariffs crystallizes a central constitutional tension: executive agility versus legislative prerogative. While the ruling offers markets a reprieve, it also compels Congress to either reassert its trade authority or cede more power to the executive branch. “This moment demands that we recalibrate our laws to guard against both tyranny and paralysis,” reflects Professor Robert Peck of Stanford Law School.

As the appeal unfolds, legal scholars, policymakers, and international partners will grapple with the broader question: How much power should the presidency wield in economic emergencies—and what safeguards must exist? The answers will shape not only tariff policy but the very architecture of American constitutional governance.

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