By Tony Romm and Ana Swanson

WASHINGTON — A panel of federal judges on Wednesday (28) blocked President Donald Trump from imposing some of his steepest tariffs on China and other US trading partners, finding that federal law did not grant him “unbounded authority” to tax imports from nearly every country around the world.

The ruling, by the US Court of International Trade, delivered an early yet significant setback to Trump, undercutting his primary leverage as he looks to pressure other nations into striking trade deals more beneficial to the United States.

Before Trump took office, no president had sought to invoke the International Emergency Economic Powers Act, a 1977 law, to impose tariffs on other nations. The law, which primarily concerns trade embargoes and sanctions, does not even mention tariffs.

But Trump adopted a novel interpretation of its powers as he announced, and then suspended, high levies on scores of countries in April. He also used the law to impose tariffs on products from Canada and Mexico in return for what he said was their role in sending fentanyl to the United States.

On Wednesday, the Court of International Trade, the primary federal legal body overseeing such matters, found that Trump’s tariffs “exceed any authority granted” to the president by the emergency powers law. Ruling in separate cases brought by states and businesses, a bipartisan panel of three judges essentially declared many, but not all, of Trump’s tariffs to have been issued illegally.

It was not clear precisely when and how the tariff collections would grind to a halt. The ruling gave the executive branch up to 10 days to complete the bureaucratic process of ending them. The Trump administration immediately filed its plans to appeal in the US Court of Appeals for the Federal Circuit.

For now, the decision threatens to undercut the administration’s efforts to reach trade agreements globally since the president is using the prospect of boundless tariffs — enacted on his own, without congressional approval — as a bargaining chip in negotiations with roughly 18 countries. Those deals are still under negotiation, and some of Trump’s top aides had told the court in recent days that an adverse ruling could imperil the talks.

The ruling does not affect tariffs issued by the Trump administration under separate legal authorities, including levies on steel, aluminium and cars, and others that Trump has threatened on pharmaceuticals, semiconductors and other critical products.

A White House spokesperson, Kush Desai, sharply rebuked the court, saying in a statement that unfair trade relationships had “decimated American communities, left our workers behind and weakened our defence industrial base — facts that the court did not dispute”.

“It is not for unelected judges to decide how to properly address a national emergency,” he said, adding that Trump would use “every lever of executive power to address this crisis”.

Everett Eissenstat, a partner at the law firm Squire Patton Boggs who served as deputy director of the National Economic Council during Trump’s first term, said the decision “dramatically impacts near-term dynamics surrounding the president’s tariff and trade agenda.”

“The story is far from over, but today marks a significant chapter in its evolution,” Eissenstat added.

Lawyers for the Justice Department had staunchly defended the legality of Trump’s strategy, telling the Court of International Trade repeatedly that it had no right to review the president’s actions.

That stance discomfited the judges multiple times over weeks of arguments. The tension arose repeatedly on May 21, when a coalition of 12 states, led by Oregon, asked the court to issue a permanent injunction that would halt Trump’s tariffs.

“The president identified the emergency, and he decided the means to address that emergency,” Brett Shumate, a Justice Department lawyer, told the court. He added that the goal had been to “bring our trading partners to the table” and create political leverage for possible deal-making.

“It may be a very dandy plan, but it has to meet the statute,” replied Senior Judge Jane A. Restani, who was nominated to the trade court by President Ronald Reagan.

By invoking emergency authority, Trump had sought to impose the tariffs immediately, without waiting for Congress to act or the government to compile reports or request public comments that other trade laws require. Frequently, the Trump administration pointed to the country’s large trade deficit to justify its actions to impose tariffs using emergency authorities.

The US trade representative, Jamieson Greer, also warned that a court ruling against the administration could stymie its efforts to negotiate trade deals with other countries.

Those agreements remain elusive. Trump has steadily lowered tariff rates in cooperation with China, while striking a tentative bargain with Britain. Yet the administration is far from its goal of ratifying “90 deals in 90 days”,  as a Trump adviser proclaimed in April.

The court decision nonetheless was a victory for the group of businesses and the coalition of states that had each sued on the grounds that Trump had overstepped the authority of his office, resulting in a trade war that had saddled them with steep financial losses.

Appearing at the trade court this month, businesses including VOS Selections, a wine and spirits importer, described Trump’s steep levies on China and other countries as a “power grab”, arguing that the economic emergency law does not explicitly say the president can impose tariffs. They also disputed Trump’s rationale for invoking that law, saying the nation’s persistent trade deficit — decades in the making — does not qualify as an emergency.

Jeffrey Schwab, a senior counsel at the Liberty Justice Centre, which represented the business plaintiffs, told the court that Trump’s position essentially would allow him to “impose tariffs on any country at any rate at any time, simply by declaring a national emergency”. The nonprofit has past ties to Richard Uihlein, who is an Illinois industrialist and a Republican megadonor.

State officials also argued that nothing about the US trade deficit merited Trump’s invocation of the emergency powers law. Brian Marshall, a lawyer at the Oregon Justice Department, told the court that the president had improperly sought to use the statute as a form of leverage anyway.

Ted Murphy, a trade lawyer at Sidley Austin, said the ruling was a blow to the president’s trade agenda but “not the final word.”

In addition to an appeal, he said, the government is likely to seek an emergency stay of the court’s ruling and could begin initiating alternative tariffs under more standard legal authorities. “In short, this story is not finished,” Murphy said.

-New York Times