• Key reciprocal tariffs imposed by President Trump on April 2, 2025, have been overturned by a federal court.
  • Section 232 tariffs on steel and aluminum remain unaffected, continuing to impact global trade.
  • The Trump administration explores alternative legal avenues to maintain its tariff policies amid legal challenges.

Court Ruling Shakes Trade Policy

A federal court delivered a significant blow to President Donald Trump's trade agenda this week, striking down reciprocal tariffs imposed under the International Emergency Powers Act of 1977 (IEEPA). The May 28 ruling from the US Court of International Trade declared that "any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional," vacating several high-profile tariff orders.

The decision specifically targets tariffs implemented on what the administration dubbed "Liberation Day" (April 2, 2025), including 25% duties on Mexico and Canada and 10% duties on China. However, the court's ruling leaves untouched the more controversial Section 232 tariffs - 25% on steel and 10% on aluminum - that took effect March 12, 2025.

Administration Weighs Response

White House officials are reportedly examining multiple options to preserve their trade policy while appealing the decision. "We're looking at all available tools to protect American industries," said one administration official who asked not to be named discussing internal deliberations.

The court's opinion leaves room for Congress to grant "limited authority" for tariffs, and the administration could potentially narrow the scope of certain tariffs under IEEPA. Alternative legal authorities like sections 122 and 338 of the Trade Act, which involve balance of payments, might also provide pathways to maintain some of the challenged tariffs.

Section 232 Expansion Continues

Despite the setback on reciprocal tariffs, the Trump administration has significantly expanded its use of Section 232 investigations since returning to office in January 2025. Beyond maintaining steel and aluminum tariffs, the administration has revived a dormant investigation into automotive imports and launched new probes targeting copper, timber, pharmaceuticals, and semiconductors.

Industry sources note the court's ruling has provided some relief to global markets, but caution that the continued Section 232 tariffs maintain pressure on supply chains. "The steel and aluminum duties are creating real challenges for manufacturers," said one automotive executive who recently met with White House officials about potential exemptions.

Exemption Policy in Flux

The administration initially took a hard line on tariff exemptions, revoking all national and product-specific waivers granted during both Trump's first term and the Biden administration. However, recent discussions with industry leaders suggest a possible softening of this stance, particularly regarding potential automotive tariffs.

As legal battles continue, trade experts warn of ongoing uncertainty. "This ruling creates a new layer of complexity in an already volatile trade environment," noted one Washington-based trade attorney familiar with the case. The administration has 60 days to file an appeal, setting the stage for continued legal and trade policy wrangling through 2025.