Despite claiming his tariffs helped prevent war between India and Pakistan, US President Donald Trump has suffered a legal setback as a federal trade court struck down his administration’s justification for steep import duties. The government argued that granting trade access to both countries helped secure a fragile ceasefire, but the court ruled Donald Trump had exceeded his authority, calling into question the use of emergency powers to push trade policy.
Court dismisses link between ceasefire and US tariffs
The Donald Trump administration told the New York-based Court of International Trade that the May 10, 2025, ceasefire between India and Pakistan was achieved “only after” both countries were promised access to American markets. The government claimed the offer of trade access was a key factor in avoiding a full-scale war between two nuclear-armed neighbours, just days after hostilities erupted.
However, a panel of three judges rejected the claim and ruled that Donald Trump’s actions under the International Emergency Economic Powers Act (IEEPA) had overstepped legal boundaries. The court stated that while it does not weigh in on the effectiveness of using tariffs for diplomatic goals, the president’s move lacked sufficient legal grounding.
Commerce Secretary warns of foreign policy fallout
In a court filing dated May 23, US Secretary of Commerce Howard W Lutnick described the tariffs as a vital strategic tool, asserting they were not just about trade, but also about leveraging diplomacy. He warned that curbing the president’s use of the IEEPA could hinder future foreign policy maneuvers.
Lutnick cited the India-Pakistan situation as a prime example of how economic levers can avert geopolitical crises. He stated that the US offer of trade access influenced both sides to agree to a ceasefire following India’s military strikes on terror bases in Pakistan-occupied Kashmir after a deadly terror attack in Pahalgam. Lutnick cautioned that any court decision weakening presidential power might force India and Pakistan to reconsider the ceasefire, thus endangering regional stability.
But India quickly dismissed any notion of American involvement in the ceasefire agreement. Indian officials insisted that the halt in hostilities was the outcome of direct military-level dialogue and had nothing to do with Washington’s trade gestures.
Donald Trump’s tariff plan, first unveiled on April 2 as part of his so-called “Liberation Day” initiative, imposed a 10% tax on most imports, with heavier duties on goods from China and the EU. The plan triggered legal backlash from 12 Democrat-led states who challenged it as arbitrary and unlawful.
