Yesterday the U.S. Court of International Trade issued a unanimous three judge* ruling against Mr. Trump’s ambitious claims to virtually unlimited power to enact his “Liberation Day” tariffs on the world, as well as his tariffs against Canada, Mexico and China over fentanyl. Mr. Trump will no doubt appeal, but markets already celebrated in the futures in the immediate aftermath last night. This ruling does not impact Mr. Trump’s steel and aluminum tariffs, but it is nonetheless a major broadside against his views of an imperial presidency.

Indeed that was the major rationale of the court’s decision–the separation of powers. The constitution very clearly assigns the ability to implement tariffs with the Congress, and there has historically been only limited exceptions that have been delegated. In its initial summary statement, the court concluded:

The Constitution assigns Congress the exclusive powers to “lay and collect Taxes, Duties, Imposts and Excises,” and to “regulate Commerce with foreign Nations.” U.S. Const. art. I, § 8, cls. 1, 3. The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 (“IEEPA”) delegates these 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.

Further, the IEEPA that Mr. Trump used does not include the word tariff in it at all! Here at BATG, we have long argued that we need to keep the long view in mind. Independent of whether you like the policy (and this policy was really, really bad), we have to consider what this level of power would allow to be done by future Democratic presidents. What would a future Democratic president be able to do by claiming a climate crisis, for example? Democrats that sued Mr. Trump and won (including Gavin Newsom) should be careful against crowing too much–the current partisan state of our country means that most people are only outraged at constitutional excesses when it’s done by the other side. And Mr. Trump’s assault on Harvard, for example, is possible to a large degree by previous outrages by the Democrats (such as Mr. Obama’s “Dear Colleague” letter to colleges and universities over Title IX). We would be much better served if both Republicans and Democrats would unite to constrain imperial ambitions by all presidents, not just the ones on the other side.**

Importantly, this will unfreeze some (but not all) of the current business uncertainty that is curtailing business investment now (the Atlanta Fed’s 2nd Qtr GDP projection is down last week noting weaker business investment). If the global trade war gets off the table, we are much more likely to have a stronger economy by next summer, rolling into the Fall ’26 mid-terms. With the narrow margins the Republicans have, this would allow the focus to be on all the good things the Republicans are trying to do, rather than having to defend Mr. Trump’s trade policies, policies which are broadly opposed across the electorate.

As Phil Magness opines,

Let May 28, 2025, serve as our true Liberation Day—a day that our economy was freed from punitive taxation and government by arbitrary executive decree. 

* One judge was appointed by Reagan, one by Trump and one by Obama. Hardly a bunch of “crazed left wing judges.”

** This does not mean I’m opposed to all of Mr. Trump’s ambitious legal agenda; indeed there are valid reasons to test the courts in a number of areas where past judicial decisions have deviated from constitutional norms. But as always with Mr. Trump, conservatives can find things that are good and bad.