U.S. President Donald Trump has faced another legal setback as a federal trade court on Wednesday put a stay on the retaliatory tariffs he announced on April 2, called Liberation Day. Trump had imposed tariffs on countries that export more goods to the U.S. than they import from it. However, the court stated that Trump overstepped his authority in this matter. Trump had claimed that under the International Emergency Economic Powers Act (IEEPA), which is designed to address unusual and extraordinary threats during a national emergency, he had the power to impose tariffs worldwide. But the court rejected this argument. Moreover, the court did not consider Trump’s claim that the stay on tariffs could lead to negative global consequences, including stopping recent military clashes between India and Pakistan.

Trump’s team argued before the court that the tariffs introduced under IEEPA helped prevent war between India and Pakistan. Following the militant attack in Pahalgam, Jammu and Kashmir, on April 22, tensions rose between the two nuclear-armed nations. Trump reportedly played a key role in fostering a ceasefire through these tariff measures. With the deadline of July 7 set for finalizing trade agreements with several countries, the issue was described to the court as being in a “sensitive phase.”

A panel of three judges from Manhattan, New York, clarified that Congress has not delegated unlimited powers to the President under IEEPA. The court stated that under IEEPA, the President can only impose economic sanctions necessary to address unusual threats in national emergencies. According to the U.S. Constitution, control over international trade is vested solely in Congress. The court did not comment on whether the President has the authority to impose tariffs but made it clear that the law does not allow it. Overstepping the authority to impose tariffs amounts to a constitutional violation, the court emphasized.