Trump administration files notice of appeal, questions authority of the court

Former President Donald Trump’s economic agenda was dealt a pair of significant setbacks this week, as a US trade court struck down his sweeping tariff orders and Elon Musk abruptly resigned from his high-profile government role, citing mounting frustrations and strategic disagreements.

In a landmark decision Wednesday, the US Court of International Trade ruled that Trump overstepped his authority by imposing broad tariffs on imports from US trading partners. The court found that the International Emergency Economic Powers Act (IEEPA), which Trump invoked to justify the tariffs, does not grant the president blanket power to regulate trade — a responsibility the Constitution assigns exclusively to Congress.

“The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage,” a three-judge panel said in the decision to issue a permanent injunction on the blanket tariff orders issued by Trump since January. “That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it.”

Financial markets cheered the ruling. The U.S. dollar rallied following the court’s order, surging against currencies such as the euro, yen and the Swiss franc in particular. Wall Street futures rose and equities across Asia also jumped.

The judges also ordered the Trump administration to issue new orders reflecting the permanent injunction within 10 days. The Trump administration minutes later filed a notice of appeal and questioned the authority of the court.

The court invalidated with immediate effect all of Trump’s orders on tariffs since January that were rooted in the International Emergency Economic Powers Act (IEEPA), a law meant to address “unusual and extraordinary” threats during a national emergency.

The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminum, using a different statute.

The decisions of the Manhattan-based Court of International Trade, which hears disputes involving international trade and customs laws, can be appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., and ultimately the U.S. Supreme Court.

TRADE TURMOIL

Trump has made charging U.S. importers tariffs on goods from foreign countries the central policy of his ongoing trade wars, which have severely disrupted global trade flows and roiled financial markets.

Companies of all sizes have been whipsawed by Trump’s swift imposition of tariffs and sudden reversals as they seek to manage supply chains, production, staffing and prices.

A White House spokesperson on Wednesday said U.S. trade deficits with other countries constituted “a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base – facts that the court did not dispute.”

“It is not for unelected judges to decide how to properly address a national emergency,” Kush Desai, the spokesperson, said in a statement.

The ruling, if it stands, blows a giant hole through Trump’s strategy to use steep tariffs to wring concessions from trading partners. It creates deep uncertainty around multiple simultaneous negotiations with the European Union, China and many other countries.

However, analysts at Goldman Sachs noted the order does not block sector-specific levies and there were other legal avenues for Trump to impose across-the-board and country-specific tariffs.

“This ruling represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major U.S. trading partners,” analyst Alec Phillips wrote in a note.

Trump has promised Americans the tariffs would draw manufacturing jobs back to U.S. shores and shrink a $1.2 trillion U.S. goods trade deficit, which were among his central campaign promises.

Without the instant leverage provided by tariffs, the Trump administration would have to find new forms of leverage or take a slower approach to negotiations with trading partners.

Initial reaction among Asian policymakers was muted, with Japan’s economy minister saying he would examine the details of the ruling, while the Bank of Korea said it saw the effective tariff rate on South Korean exports under the ruling falling to 9.7% from 13.3%.

Hong Kong’s financial secretary said the court decision would “at least bring President Trump to reason”.

BUSINESSES HURTING

The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the duties and the other by 12 U.S. states.

The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, have said the tariffs will hurt their ability to do business.

“There is no question here of narrowly tailored relief; if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all,” the judges wrote in their decision.

At least five other legal challenges to the tariffs are pending.

Oregon Attorney General Dan Rayfield, a Democrat whose office is leading the states’ lawsuit, called Trump’s tariffs unlawful, reckless and economically devastating.

“This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim,” Rayfield said in a statement.

Trump has claimed broad authority to set tariffs under IEEPA. The law has historically been used to impose sanctions on enemies of the U.S. or freeze their assets. Trump is the first U.S. president to use it to impose tariffs.

The Justice Department has said the lawsuits should be dismissed because the plaintiffs have not been harmed by tariffs that they have not yet paid, and because only Congress, not private businesses, can challenge a national emergency declared by the president under IEEPA.

In imposing the tariffs in early April, Trump called the trade deficit a national emergency that justified his 10% across-the-board tariff on all imports, with higher rates for countries with which the United States has the largest trade deficits, particularly China.

The country-specific tariff rates were paused for 90 days a week later though the baseline 10% duty was put in place for most nations. The Trump administration on May 12 said it was also temporarily reducing the steepest tariffs on China while working on a longer-term trade deal. Both countries agreed to cut tariffs on each other for at least 90 days.

Musk abruptly departs DOGE role
Only hours after the court decision, another pillar of Trump’s economic platform crumbled as Elon Musk confirmed his departure from the Department of Government Efficiency (DOGE), a special agency Trump had created to streamline the federal bureaucracy. Musk, who was granted sweeping authority to cut costs and eliminate redundancy, said his efforts had been stymied by entrenched interests and growing political interference.

“The federal bureaucracy situation is much worse than I realized,” Musk told The Washington Post this week. “It’s an uphill battle trying to improve things in D.C., to say the least.”

Musk’s exit, confirmed by the White House late Wednesday, follows days of escalating tension. On Tuesday, the Tesla CEO publicly criticized a Republican-backed tax and spending package championed by Trump, calling it “too expensive” and counterproductive to DOGE’s mission. The remarks reportedly angered top White House officials and triggered a wave of damage control calls to Republican senators.

While Musk retains a close personal relationship with Trump, his departure appears to have been orchestrated at a senior staff level without a direct conversation between the two men. His 130-day tenure, marked by controversial staff cuts and public stunts—including wielding a red chainsaw at a conservative conference—had grown increasingly polarizing.

DOGE claims to have reduced the federal workforce by nearly 260,000 employees through buyouts, early retirements, and firings. But critics point to logistical snarls, legal reversals, and a brain drain of technical talent as signs of dysfunction. Several agencies affected by DOGE cuts have already begun reasserting control over staffing and budgeting.

A strategy in retreat
Together, the court’s rebuke of Trump’s tariff strategy and Musk’s departure from DOGE reflect a broader unraveling of key components of Trump’s approach to governance—one that favored bold executive action, disruption of established norms, and centralized authority.

Trump, who had campaigned on bringing manufacturing jobs back to American soil and dramatically reducing government waste, now faces increased scrutiny over the legality and effectiveness of his signature policies. While his supporters frame these efforts as necessary corrections to decades of political inertia, critics say the setbacks demonstrate the limits of unilateral governance and the risks of bypassing institutional processes.

Whether these developments will alter Trump’s political standing ahead of a potential 2028 presidential run remains unclear. But for now, the twin blows underscore how legal constraints and administrative fatigue are beginning to catch up with an agenda built on maximum disruption.