A U.S. trade court delivered a significant legal setback to former President Donald Trump’s economic policies this week, ruling that his broad tariff orders exceeded presidential authority.
The U.S. Court of International Trade issued a permanent injunction against tariffs imposed under the International Emergency Economic Powers Act (IEEPA), stating that Congress—not the president—holds constitutional power over trade regulation.
The decision, handed down Wednesday, immediately nullified all Trump-era tariffs justified under IEEPA, though industry-specific duties on steel, aluminum, and automobiles remain intact.
The ruling sent financial markets surging, with the U.S. dollar strengthening and Asian equities rising. The Trump administration swiftly filed an appeal, arguing that trade deficits constitute a national emergency warranting executive action.
Businesses and States Celebrate Legal Victory
The case stemmed from lawsuits filed by small businesses and 12 U.S. states, which argued the tariffs harmed their operations. Oregon Attorney General Dan Rayfield, a Democrat leading the states’ challenge, called the ruling a rebuke of Trump’s “unlawful and reckless” trade policies. Meanwhile, affected businesses—from wine importers to manufacturers—welcomed the relief.
Analysts note the ruling complicates Trump’s aggressive trade negotiations with China, the EU, and other partners. While Goldman Sachs suggested alternative legal avenues for tariffs remain, the decision undermines a key pillar of Trump’s economic strategy: using tariffs as leverage to revive U.S. manufacturing and shrink trade deficits.
Musk Abruptly Quits Government Efficiency Role
Adding to the week’s turmoil, billionaire Elon Musk resigned from the Department of Government Efficiency (DOGE), a Trump-created agency tasked with slashing federal bureaucracy. Musk cited frustration with political interference and entrenched resistance to reform.
His departure followed public clashes with the White House, including criticism of a GOP-backed spending bill. During his 130-day tenure, DOGE claimed to have cut 260,000 federal jobs through buyouts and layoffs, but critics pointed to chaos, legal challenges, and a loss of technical expertise. Musk’s exit signals further instability in Trump’s push to overhaul government operations.
A Setback for Trump’s Governing Strategy
The twin developments highlight the challenges of Trump’s disruptive approach to governance, which relied on executive power and sidelined traditional processes. With his tariff strategy in legal jeopardy and a high-profile ally stepping down, Trump faces mounting scrutiny over the viability of his economic agenda—potentially reshaping his political momentum ahead of a possible 2028 run.
