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A U.S. federal court has blocked U.S. President Donald Trump’s plan to implement sweeping "Liberation Day" tariffs using emergency powers, ruling that the action was “unconstitutional” and
exceeded the president’s legal authority. The decision came on Wednesday from a three-judge panel on the Court of International Trade in Manhattan.
The panel found that federal law did not grant Trump “unbounded authority” to impose tariffs on several countries.
In a big setback to Trump, the court nullified Trump’s executive orders issued on April 2, which had introduced a standard 10% tariff on most imported goods, with higher rates for nations
running significant trade surpluses with the U.S., such as China, India and the European Union.
The judges determined that Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) as a basis for the tariffs was unconstitutional.
Prior to Trump’s presidency, no U.S. president had attempted to use the International Emergency Economic Powers Act—a law enacted in 1977—to justify imposing tariffs on foreign countries.
The statute, which mainly deals with trade sanctions and embargoes, makes no reference to tariffs.
“Granting the president unchecked authority over tariffs would represent an improper transfer of legislative powers to the executive branch,” the panel stated in an unsigned opinion.
They concluded that the president had gone beyond his lawful powers by applying so-called “reciprocal” tariffs worldwide.
However, the Trump administration quickly reacted to the court's decision by filing an appeal just minutes after the ruling. “It’s not the role of unelected judges to determine the
appropriate response to a national emergency,” said White House deputy press secretary Kush Desai in a statement. “President Trump made a promise to prioritize America, and this
Administration remains dedicated to utilizing all available executive authority to confront this challenge and bring back American greatness,” he added.
On April 2, U.S. President Donald Trump unveiled a broad set of new tariffs, marking the most significant proposed tariff hike since the 1930s. As part of the "reciprocal tariff" plan,
Indian exports to the U.S. were hit with an added 26% tariff. However, on April 9, the U.S. administration approved a 90-day delay in enforcing most of the tariffs, temporarily shifting back
to a uniform 10% rate for nearly all affected countries.
The imposition of reciprocal tariffs by the US, particularly a 26% tariff on Indian imports effective April 2025, has injected uncertainty into India’s export outlook, but a successful
US-India trade agreement could flip current headwinds into tailwinds, the ministry of finance said this week.
Even though the U.S. is the single largest export destination for Indian goods, the temporary relief provided by the pause and the smaller portion of goods exports in GDP compared to other
emerging markets in Asia-Pacific limit the effects of tariffs on India’s growth, said Moody’s.
Earlier in May, the United States decided to temporarily cut reciprocal tariffs on China by 115% as part of an agreement between the two countries during trade talks in Geneva. Both
countries said they will reduce reciprocal tariffs by 115%. This brings down tariffs on Chinese goods to the US to 30% from 145% earlier while China will levy a 10% tariff on US goods
compared with 125% earlier.
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