WASHINGTON (AP) — A little-known federal court threw a giant monkey wrench into a foundational part of President Donald Trump's economic agenda by striking down most of the sweeping tariffs he has imposed since taking office.
The Court of International Trade, based in New York, on late Wednesday said that Trump had overstepped his authority by using a 1977 law, the International Economic Emergency Powers Act, to justify tariffs on Canada, Mexico, China, and more than 50 other nations.
So what is the Court of International Trade? And how can it wield such power?
The CIT is a specialized federal court that typically considers disputes over customs duties and trade restrictions. It has evolved from an 1890 entity called the Board of General Appraisers, and was renamed the Customs Court in 1926.
The CIT typically deals with highly-technical cases that are rarely as high-profile as this case. It handles trade-related disputes from all over the country.
Nine judges sit on the court, and most of its cases are handled by just one of those judges. But three judges considered the challenge to Trump's tariffs, which typically happens when a case involves “the constitutionality of an act of Congress, a Presidential proclamation, or an Executive order, or otherwise has broad and significant implications,” the court says on its website.
The three judges in this case were Gary Katzman, who was appointed by President Barack Obama; Timothy Reif, who was appointed by Trump; and Jane Restani, who was appointed by President Ronald Reagan.
Its decisions can be appealed to the Court of Appeals for the Federal Circuit and then to the Supreme Court. The Trump administration has said it will file an appeal, and the appeals court on Thursday said the duties could remain in place while it considered the case.
Karoline Leavitt, White House press secretary, sharply criticized the decision, saying that the members of the three-judge panel “brazenly abused their judicial power to usurp the authority of President Trump” and added that the courts “should have no role here.”
Leavitt said the president’s tariff policies are “legally sound and grounded in common sense.”
Yet many trade and legal experts said that at least parts of the CIT's ruling would likely stand up under scrutiny.
Edward Alden, a senior fellow at the Council on Foreign Relations, said that the decision striking down Trump's 10% universal tariffs, as well as his so-called reciprocal tariffs on more than 50 countries, would likely withstand appeal. That's because, as the CIT pointed out, those duties are intended to counter trade deficits the United States has with those countries.
Yet Congress specifically said that duties to address trade imbalances must be applied under a different law, not IEEPA. That law allows a maximum of 15% tariff for up to 150 days.
“I think it’s airtight because there’s no way around the reasoning,” Alden said, “which is Congress controls tariffs and Congress quite explicitly delegated the authority” to a separate law.
Trump said that his duties on Canada, Mexico, and some of the tariffs on China were in response to those countries' alleged shortcomings in combatting illegal drugs and unauthorized immigration. It's possible that other judges will find that the president has the authority to impose those tariffs under the IEEPA law, Alden said.
Other analysts said that part of the ruling would likely be upheld, as well.
“The court said what everybody knew — that there is no reasonable basis to say these tariffs are related to fentanyl,” Barry Appleton, a law professor and co-director New York Law School’s Center for International Law, said.
More generally, “the president cannot under the guise of emergency powers claim for himself what the Constitution gives to Congress,” he added.
Some of Trump’s duties — those on steel, aluminum, and cars — will remain in place because they rely on separate laws that weren’t challenged. Many economists have said that Trump could seek to re-impose many of his tariffs under a range of other laws that authorize tariffs, though usually after a legal process that can take a few months.
AP Writer Michelle L. Price contributed to this report.
FILE - The United States Court of International Trade is seen in front of the Jacob K. Javits Federal building in this Wednesday, March 18, 2015, in New York. (AP Photo/Mary Altaffer, File)
FILE - President Donald Trump speaks to reporters in the Oval Office of the White House, Friday, May 23, 2025, in Washington. (AP Photo/Evan Vucci, File)
WASHINGTON (AP) — The Trump administration's criminal investigation of Federal Reserve Chair Jerome Powell appeared on Monday to be emboldening defenders of the U.S. central bank, who pushed back against President Donald Trump’s efforts to exert more control over the Fed.
The backlash reflected the overarching stakes in determining the balance of power within the federal government and the path of the U.S. economy at a time of uncertainty about inflation and a slowing job market. This has created a sense among some Republican lawmakers and leading economists that the Trump administration had overstepped the Fed's independence by sending subpoenas.
The criminal investigation — a first for a sitting Fed chair — sparked an unusually robust response from Powell and a full-throated defense from three former Fed chairs, a group of top economic officials and even Republican senators tasked with voting on Trump's eventual pick to replace Powell as Fed chair when his term expires in May.
White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell, who has proven to be a foil for Trump by insisting on setting the Fed's benchmark interest rates based on the data instead of the president's wishes.
“One thing for sure, the president’s made it quite clear, is Jerome Powell is bad at his job,” Leavitt said. “As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out.”
The investigation demonstrates the lengths the Trump administration is willing to go to try to assert control over the Fed, an independent agency that the president believes should follow his claims that inflationary pressures have faded enough for drastic rate cuts to occur. Trump has repeatedly used investigations — which might or might not lead to an actual indictment — to attack his political rivals.
The risks go far beyond Washington infighting to whether people can find work or afford their groceries. If the Fed errs in setting rates, inflation could surge or job losses could mount. Trump maintains that an economic boom is occurring and rates should be cut to pump more money into the economy, while Powell has taken a more cautious approach in the wake of Trump's tariffs.
Several Republican senators have condemned the Department of Justice's subpoenas of the Fed, which Powell revealed Sunday and characterized as “pretexts” to pressure him to sharply cut interest rates. Powell also said the Justice Department has threatened criminal indictments over his June testimony to Congress about the cost and design elements of a $2.5 billion building renovation that includes the Fed's headquarters.
“After speaking with Chair Powell this morning, it’s clear the administration’s investigation is nothing more than an attempt at coercion,” said Sen. Lisa Murkowski, R-Alaska, on Monday.
Jeanine Pirro, U.S. attorney for the District of Columbia, said on social media that the Fed “ignored” her office’s outreach to discuss the renovation cost overruns, “necessitating the use of legal process — which is not a threat.”
“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” Pirro posted on X, although the subpoenas and the White House’s own statement about determining Powell's criminality would suggest the risk of an indictment.
A bipartisan group of former Fed chairs and top economists on Monday called the Trump administration's investigation “an unprecedented attempt to use prosecutorial attacks" to undermine the Fed's independence, stressing that central banks controlled by political leaders tend to produce higher inflation and lower growth.
“I think this is ham-handed, counter-productive, and going to set back the president’s cause,” said Jason Furman, an economist at Harvard and former top adviser to President Barack Obama. The investigation could also unify the Fed’s interest-rate setting committee in support of Powell, and means “the next Fed chair will be under more pressure to prove their independence.”
The subpoenas apply to Powell's statements before a congressional committee about the renovation of Fed buildings, including its marble-clad headquarters in Washington, D.C. They come at an unusual moment when Trump was teasing the likelihood of announcing his nominee this month to succeed Powell as the Fed chair and could possibly be self-defeating for the nomination process.
While Powell's term as chair ends in four months, he has a separate term as a Fed governor until January 2028, meaning that he could remain on the board. If Powell stays on the board, Trump could be blocked from appointing an outside candidate of his choice to be the chair.
Powell quickly found a growing number of defenders among Republicans in the Senate, who will have the choice of whether to confirm Trump's planned pick for Fed chair.
Sen. Thom Tillis, a North Carolina Republican and member of the Senate Banking panel, said late Sunday that he would oppose any of the Trump administration’s Fed nominees until the investigation is "resolved."
“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said.
Sen. Dave McCormick, R-Penn, said the Fed may have wasted public dollars with its renovation, but he said, “I do not think Chairman Powell is guilty of criminal activity.”
Senate Majority Leader John Thune offered a brief but stern response Monday about the tariffs as he arrived at the U.S. Capitol, suggesting that the administration needed “serious” evidence of wrongdoing to take such a significant step.
“I haven’t seen the case or whatever the allegations or charges are, but I would say they better, they better be real and they better be serious,” said Thune, a Republican representing South Dakota.
If Powell stays on the board after his term as chair ends, the Trump administration would be deprived of the chance to fill another seat that would give the administration a majority on the seven-member board. That majority could then enact significant reforms at the Fed and even block the appointment of presidents at the Fed's 12 regional banks.
“They could do a lot of reorganizing and reforms” without having to pass new legislation, said Mark Spindel, chief investment officer at Potomac River Capital and author of a book on Fed independence. “That seat is very valuable.”
Powell has declined at several press conferences to answer questions about his plans to stay or leave the board.
Scott Alvarez, former general counsel at the Fed, says the investigation is intended to intimidate Powell from staying on the board. The probe is occurring now “to say to Chair Powell, ’We’ll use every mechanism that the administration has to make your life miserable unless you leave the Board in May,'" Alvarez said.
Asked on Monday by reporters if Powell planned to remain a Fed governor, Kevin Hassett, director of the White House National Economic Council and a leading candidate to become Fed chair, said he was unaware of Powell’s plans.
“I’ve not talked to Jay about that,” Hassett said.
A bipartisan group of former Fed chairs and top economists said in their Monday letter that the administration’s legal actions and the possible loss of Fed independence could hurt the broader economy.
“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” the statement said.
The statement was signed by former Fed chairs Ben Bernanke, Janet Yellen, and Alan Greenspan, as well as former Treasury Secretaries Henry Paulson and Robert Rubin.
Still, Trump's pressure campaign had been building for some time, with him relentlessly criticizing and belittling Powell.
He even appeared to preview the shocking news of the subpoenas at a Dec. 29 news conference by saying he would bring a lawsuit against Powell over the renovation costs.
“He’s just a very incompetent man,” Trump said. “But we’re going to probably bring a lawsuit against him.”
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AP writers Lisa Mascaro and Joey Cappelletti contributed to this report.
FILE - Federal Reserve Chairman Jerome Powell, right, and President Donald Trump look over a document of cost figures during a visit to the Federal Reserve, July 24, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson, File)
