In a major legal setback for the Trump administration, the US Court of International Trade has invalidated the use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. The ruling, reported by Morningstar, eliminates all country-specific tariff hikes implemented in 2025, including a 30% hike on Chinese goods and a 10% increase on imports from other nations.
As a result, the average US tariff rate has plunged from about 18% to roughly 7%. While still above the 2024 average of 2.4%, this marks a significant easing of trade tensions and could help dampen inflation and recession risks.
Product-specific tariffs, including 25% levies on autos, steel, and aluminum, remain intact under Section 232 authority, which was not affected by the court’s decision. The administration is also exploring other legal avenues—such as Sections 301 and 122—to reintroduce broad tariffs, although procedural delays could push implementation into late 2025.
Market reactions have been positive, with US stocks recovering near record highs, reflecting optimism that the tariff rollback may soften economic headwinds. However, the possibility of higher tariffs returning—either through new strategies or a reversal by higher courts—keeps the trade outlook uncertain.