A US trade court ruling that blocked most of former President Donald Trump's sweeping "Liberation Day" tariffs has thrown a wrench into the administration's aggressive trade agenda. However, according to economists at Goldman Sachs, the setback may be more procedural than permanent.
In a note to clients on Thursday, the bank's analysts said the administration retains a host of alternative tools—chief among them Section 232 and Section 122 authorities—that could compensate for the halted duties. These tools, if fully activated, could more than offset the 6.7pp of levies struck down by the US Court of International Trade this week.
"This ruling represents a setback for the administration's tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners," said Alec Phillips, chief US political economist at Goldman Sachs. "For now, we expect the Trump administration will find other ways to impose tariffs."
The May 28 ruling came from a three-judge panel in Manhattan, siding with Democratic-led states and small businesses that challenged Trump's reliance on emergency powers to justify the tariffs. The court gave the administration ten days to halt collection, prompting an immediate appeal from the White House.
According to Bloomberg, legal experts say the court's rejection of the International Emergency Economic Powers Act (IEEPA) as a basis for unilateral global tariffs weakens one of Trump's favored mechanisms for asserting economic leverage abroad.
Yet the ruling does not affect tariffs enacted under Section 232, which targets steel, aluminum, and automotive imports under national security justifications. Goldman estimates that pending Section 232 investigations—if they result in 25% duties—could generate an additional 7.6 percentage points of tariffs.
The White House also has Section 122 at its disposal, which permits tariffs of up to 15% for a 150-day period without congressional approval. Meanwhile, initiating new Section 301 investigations—commonly used to counter unfair trade practices—remains an option, though it would take longer to implement.
Beyond economic arguments, the administration is also invoking national security and foreign policy imperatives to defend its approach.
In a May 23 legal submission, Commerce Secretary Howard Lutnick cited the recent India-Pakistan ceasefire as a direct outcome of Trump's strategic use of US trade access. According to Lutnick, the truce—reached after four days of cross-border fighting—was achieved only after Trump intervened and offered both countries improved trading terms with Washington.
"Constraining the president's tariff authority could jeopardize fragile diplomatic achievements like the India-Pakistan ceasefire," Lutnick wrote. "Invalidating the use of emergency powers would dismantle a cornerstone of national security architecture."
That assertion is already fueling a geopolitical dispute. While Pakistan has welcomed foreign mediation and praised Trump's involvement, India insists the ceasefire was negotiated bilaterally and denies any third-party role. The claim that US trade policy helped avert a larger conflict adds a dramatic layer to an already complex legal and political battle.
The trade court's decision halts a wide swath of tariffs, including the global flat rate, elevated levies on China, and fentanyl-related tariffs affecting China, Canada, and Mexico. The Justice Department's notice of appeal signals that a prolonged legal fight lies ahead.
In the meantime, markets and trading partners remain on edge. Whether Trump can reassert his tariff authority through alternative channels—or whether legal and political headwinds will force a recalibration of his trade playbook—remains to be seen.
But few expect him to back down. As Goldman's Phillips put it, "The administration is likely to remain aggressive in its use of trade tools, even if it must change instruments."
Article edited by Jack Wu
