A US federal court on Wednesday blocked President Donald Trump's "Liberation Day" tariffs from going into effect.
The Court of International Trade in Manhattan ruled that the President overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the US than they buy.
The three-judge panel said the US Constitution gives Congress exclusive powers to regulate commerce with other countries, which cannot be overruled by the President's emergency powers to protect the economy.
Mr Trump has said he has the power to act because the country’s trade deficits amount to a national emergency. He imposed tariffs on most of the countries in the world at one point, earlier putting levies on imports from Canada, China and Mexico to combat the illegal flow of immigrants and synthetic opioids across the US border. The moves sent markets reeling.
The lawsuit, filed by the nonpartisan Liberty Justice Centre on behalf of five small businesses that import goods from countries hit by the duties, was the first major legal challenge to Mr Trump's tariffs.
The companies said the tariffs would hurt their ability to do business, and that the 1977 International Emergency Economic Powers Act does not authorise the use of tariffs.
Even if it did, they said, the trade deficit does not meet the law’s requirement that an emergency be caused only by an "unusual and extraordinary threat". The US has run a trade deficit with the rest of the world for 49 consecutive years.
The lawsuit is one of seven court challenges to Mr Trump's tariff policies, along with challenges from 13 states and other groups of small businesses. The administration is expected to appeal.
It has argued that courts approved then-president Richard Nixon’s emergency use of tariffs in 1971, and that only Congress, and not the courts, can determine the "political" question of whether the president’s rationale for declaring an emergency complies with the law.
