Court Overturns Core of Trump’s Tariff Policy

In a major legal rebuke, the U.S. Court of International Trade has struck down large portions of former President Donald Trump’s tariff strategy, dealing a significant blow to the aggressive protectionist agenda that defined much of his foreign and economic policy. At the center of the ruling are the so-called “Liberation Day” tariffs, duties placed on imports from China, Canada, and Mexico, which the Trump administration claimed were necessary to curb illegal drug trafficking and to rebalance trade relations.

The court found that these tariffs were imposed without proper adherence to procedural and statutory requirements. Specifically, it ruled that the administration exceeded its legal authority under federal trade laws and bypassed necessary economic evaluations and public input. The decision could affect billions in trade and reshape U.S. relationships with key partners.

Targeted Tariffs Declared Illegal

Among the tariffs ruled unlawful were broad levies on goods from China, once justified under the pretense of stopping the flow of fentanyl, and retaliatory duties on Canada and Mexico. These measures were part of a broader economic campaign intended to push countries into renegotiating trade agreements and tightening border enforcement.

The court criticized the administration’s use of national emergency justifications, stating that there was no sufficient evidence showing that these imports posed a direct threat to national security. As a result, the court ordered the reversal of these duties, which had strained diplomatic relations and contributed to inflationary pressure on consumer goods.

Legal Loophole Shields Section 232 Tariffs

Despite the court’s sweeping decision, several key tariffs remain untouched, specifically those enacted under Section 232 of the Trade Expansion Act of 1962. This Cold War-era provision gives the president authority to impose tariffs when imports are deemed a threat to national security, pending a review by the Department of Commerce.

The Trump administration used this legal mechanism to impose a 25% tariff on imported steel and an equivalent tariff on aluminum. These were among the first tariffs imposed in 2018, and their survival is due to the administration’s strict adherence to the procedural steps outlined in Section 232, including Commerce Department studies and formal national security findings.

Steel & Aluminum Revenues Surging

According to the latest data from U.S. Customs and Border Protection, the steel and aluminum tariffs have been a lucrative source of federal income. In the 2025 fiscal year, which began on October 1, 2024, steel tariffs alone have collected nearly $1.3 billion. The aluminum tariffs, initially set at 10% and later raised to 25%, have brought in approximately $767 million over the same period.

The tariffs were intended to support U.S. manufacturers and revive the domestic metals industry. However, critics argue they have increased costs for downstream industries, including construction and aerospace. Still, the government continues to defend their use under the national security clause.

Auto Industry Tariffs Tactically Adjusted

The court also allowed newly imposed tariffs on imported automobiles and auto parts to stand. These tariffs, effective this month, were deliberately structured to exclude certain foreign components to avoid duplication with existing duties on steel and aluminum. This move was designed to soften the blow on U.S. auto manufacturers that rely on a global supply chain.

So far in fiscal 2025, these automobile tariffs have raised nearly $1.2 billion. Auto industry leaders remain concerned about long-term implications, particularly on consumer prices, but welcomed the exemptions that spared parts from countries such as Japan, South Korea, and Germany from double taxation.

Trump Administration Vows to Fight Back

Unwilling to concede defeat, the Trump team has responded by appealing to the U.S. Court of Appeals for the Federal Circuit. In legal filings, the Justice Department warned that the lower court’s decision “jeopardizes ongoing negotiations with dozens of countries by severely constraining the President’s leverage.”

The Trump camp argues that trade tariffs are not merely economic tools but integral parts of U.S. foreign policy. They believe the court’s ruling undermines the executive branch’s flexibility to respond to global threats and negotiate favorable deals. The appeal is expected to extend the legal battle well into 2026, potentially drawing in Congress for legislative clarification.

Key Takeaways

• U.S. court ruled Trump’s “Liberation Day” tariffs on imports from China, Canada, and Mexico illegal due to lack of legal grounding.

• Tariffs on steel, aluminum, and automobiles remain intact, generating over $3.2 billion in fiscal 2025 under Section 232 national security authority.

• Trump administration has appealed the ruling, citing risks to U.S. leverage in global trade negotiations.