Volkswacht Bodensee - US court blocks tariffs in major setback for Trump

The opinion marks a significant setback to Trump as he bids to redraw the US trading relationship with the world by forcing governments to the negotiating table through tough new tariffs.

Trump's global trade war has roiled financial markets with a stop-start rollout of import levies aimed at punishing economies that sell more to the United States than they buy.

Trump argued that the resulting trade deficits and the threat posed by the influx of drugs constituted a "national emergency" that justified widespread tariffs.

But the three-judge Court of International Trade ruled Wednesday that Trump had overstepped his authority, and barred most of the duties announced since he took office in January.

Attorneys for the Trump administration promptly filed an appeal against the ruling, which gave the White House 10 days to complete the bureaucratic process of halting the tariffs.

"It is not for unelected judges to decide how to properly address a national emergency," White House spokesman Kush Desai said in a statement.

"President Trump pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness," Desai said.

- China: 'cancel wrongful tariffs' -

The ruling comes as Trump was using the tariffs as leverage in trade negotiations with friends and foes, including the European Union and China.

Beijing -- which was hit by 145 percent tariffs before they were sharply reduced to give space for negotiations -- reacted to the court ruling by saying the United States should scrap the levies.

"China urges the United States to heed the rational voices from the international community and domestic stakeholders and fully cancel the wrongful unilateral tariff measures," said commerce ministry spokeswoman He Yongqian.

Japan's tariffs envoy Ryosei Akazawa said as he left for a fourth round of talks in Washington that Tokyo -- reeling from tariffs on cars -- would study the ruling.

Trump unveiled sweeping import duties on nearly all trading partners on April 2, at a baseline 10 percent, plus steeper levies on dozens of economies, including China and the European Union.

The US court's ruling also quashes duties that Trump imposed on Canada, Mexico and China separately using emergency powers.

But it leaves 25-percent duties on the auto, steel and aluminum industries intact.

Some of the turmoil was calmed after Trump paused the larger tariffs for 90 days pending negotiations.

Asian markets rallied on Thursday and US futures pointed to early gains, but Europe was mixed, with London in the red while Paris and Frankfurt rose.

The ruling "throws into disarray several trade deals that have already been agreed, and those that are still in the negotiation phase," said Kathleen Brooks, research director at XTB brokerage firm.

- 'Extraordinary threat' -

The federal trade court was ruling in two separate cases -- brought by businesses and a coalition of state governments -- arguing that the president had violated Congress's power of the purse.

The judges said the cases rested on whether the International Emergency Economic Powers Act of 1977 (IEEPA) delegate such powers to the president "in the form of authority to impose unlimited tariffs on goods from nearly every country in the world."

"The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder."

The judges stated that any interpretation of the IEEPA that "delegates unlimited tariff authority is unconstitutional."

Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, said the ruling confirmed that "these tariffs are an illegal abuse of executive power."

"Trump's declaration of a bogus national emergency to justify his global trade war was an absurd and unlawful use of IEEPA," he said.

White House aide Stephen Miller called it a "judicial coup."

Analysts at London-based research group Capital Economics said the case may end up in the hands of the Supreme Court.

"But it would be unlikely to mark the end of the tariff war given the various other routes through which the Trump administration could impose tariffs," they said, noting that the US president could explore other sections of US law or seek congressional approval for tariffs.

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R.Flueckiger--VB