VINACHEM

A US court ruled on Wednesday that the president cannot impose global tariffs under an emergency act, a judgment that would void many of the tariffs that the nation imposed in 2025 against nearly every country in the world.

The administration of US President Donald Trump filed a notice that it was appealing the ruling.

Under the judgment issued by the US Court of International Trade, the US has 10 calendar days to withdraw the following tariffs:

– The 10% baseline tariffs against most of the world that the US issued during its so-called Liberation Day event on 2 April. These include the reciprocal tariffs that were later paused. The US issued the tariffs under Executive Order 14257, which intended to address the nation’s trade deficit.

– The tariffs that the US initially imposed on imports from Canada under Executive Order 14193. These were intended to address the flow of illicit drugs. The US later limited the scope of these tariffs to cover imported goods that do not comply with the nations’ trade agreement, known as the US-Mexico-Canada Agreement (USMCA).

– The tariffs that the US initially imposed on imports from Mexico under Executive Order 14194. These were intended to address the flow of immigrants and illicit drugs. Like the Canadian tariffs, these were later limited to cover imported goods that did not comply with the USMCA.

– The 20% tariffs that the US imposed on imports from China under Executive Order 14195, which was intended to address the flow of illicit drugs.

The US imposed these tariffs under the International Emergency Economic Powers Act (IEEPA), which gives the president authority to take actions to address a severe national security threat.

To justify the use of the IEEPA, Trump declared that the trade deficit, drug smuggling and illegal immigration constituted national emergencies.

If the ruling stands, it would remove the tariffs that the US has imposed on many imports of commodity plastics and chemicals.

By extension, the ruling would remove the threat of retaliatory tariffs that other countries could impose on the nation’s substantial exports of polyethylene (PE), polyvinyl chloride (PVC) and other ethylene derivatives.

The court’s order does not cover the sectoral tariffs that the US has imposed on specific products such as steel and aluminium.

In addition, it does not cover the Section 301 tariffs that the US imposed against Chinese imports during Trump’s first term. These tariffs were intended to address unfair trade practices.

RATIONALE BEHIND THE COURT’S JUDGMENT

The US constitution delegates the power to impose tariffs to congress. Although congress has delegated trade authority to the president, it had set clear limitations that allowed the legislature to retain the power to impose tariffs.

The IEEPA does not delegate unbounded tariff authority to the president, the court said. “Any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.”

The authority that congress delegated to the president under IEEPA is limited and does not include the power to impose any tariffs, the court said.

COURT FINDS NO EMERGENCY

Even if the president could impose tariffs under IEEPA, the trade deficit does not constitute an emergency, the court ruled. The US already has a statute to address trade deficits under Section 122.

“Section 122 removes the president’s power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits, from the broader powers granted to a president during a national emergency under IEEPA by establishing an explicit non-emergency statute with greater limitations,” it said.

In addition, the court found that drug trafficking and illegal immigration fail to meet the emergency threshold established under IEEPA.

To meet that threshold, the emergency must have a substantial part of its source outside of the US and it must pose a threat to the nation’s national security, foreign policy or economy. Also, the emergency must be unusual and extraordinary. The action that the president takes must deal directly with the threat.

The court found that the tariffs fail to directly deal with drug trafficking and illegal immigration. While they may provide the US with leverage to negotiate agreements, such leverage does not meet the threshold of addressing the emergency at hand.