In a significant legal blow to President Donald Trump, a federal trade court has struck down his attempt to impose sweeping new tariffs, rejecting his administration’s justification that the move helped facilitate the 10 May ceasefire between India and Pakistan.
The New York-based Court of International Trade, in a unanimous ruling by a three-judge panel, concluded on Wednesday that Trump had exceeded his legal authority under the International Emergency Economic Powers Act (IEEPA). The court stated clearly, "The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage."
The Trump administration had argued that its tariff threats were part of a broader diplomatic maneuver to prevent a full-blown conflict between the South Asian nuclear-armed neighbors. In a court filing dated 23 May, US Commerce Secretary Howard W. Lutnick claimed, “India and Pakistan, two nuclear powers engaged in combat operations just 13 days ago, reached a tenuous ceasefire on 10 May 2025. This ceasefire was only achieved after President Trump interceded and offered both nations trading access with the United States to avert a full-scale war.”
However, the court rejected the rationale, siding instead with a coalition of 12 Democrat-led states that had sued the administration. The plaintiffs argued that invoking IEEPA to implement tariffs — including a steep 26% duty on Indian goods — was “unlawful and arbitrary.”
India, for its part, has firmly denied the Trump administration’s claims of involvement in brokering the May 10 ceasefire, asserting that it was achieved through bilateral backchannel diplomacy independent of U.S. mediation or incentives.
Despite the court ruling, Lutnick warned of broader implications. “An adverse ruling that constrains presidential power in this case could lead India and Pakistan to question the validity of President Trump’s offer, threatening the security of an entire region and the lives of millions,” he wrote in the filing.
He also defended the tariff policy on economic grounds, stating that it had forced key trade rivals like China to negotiate. “The tariffs compelled Beijing to the negotiating table,” he said, referencing allegations of Chinese economic aggression and illicit drug trade flows.
The case originated from a set of tariffs announced by Trump on 2 April under what he dubbed “Liberation Day.” The plan included a 10% blanket tariff on most imports, with even higher duties for China and the European Union. Some tariffs were later paused as the administration pursued trade deals.
