By Dietrich Knauth and Daniel Wiessner

NEW YORK (Reuters) -A U.S. trade court on Wednesday blocked President Donald Trump's tariffs from going into effect in a sweeping ruling that the president overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.

The Court of International Trade said the U.S. Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the U.S. economy.

"The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it," a three-judge panel said in the decision.

The Trump administration minutes later filed a notice of appeal and questioned the authority of the court. The decisions of the Manhattan-based Court of International Trade, which hears disputes involving international trade and customs laws, can be appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., and ultimately the U.S. Supreme Court.

Trump has made charging U.S. importers tariffs on goods from foreign countries the central policy of his ongoing trade wars, which have severely disrupted global trade flows and roiled financial markets.

Companies of all sizes have been whipsawed by Trump's swift imposition of tariffs and sudden reversals as they seek to manage supply chains, production, staffing and prices.

A White House spokesperson on Wednesday said U.S. trade deficits with other countries constituted "a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base – facts that the court did not dispute."

"It is not for unelected judges to decide how to properly address a national emergency," Kush Desai, the spokesperson, said in a statement.

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Financial markets cheered the ruling. The U.S. dollar rallied following the court's order, surging against currencies such as the euro, yen and the Swiss franc in particular. Wall Street futures rose and equities across Asia also rose.

The ruling, if it stands, blows a giant hole through Trump's strategy to use steep tariffs to wring concessions from trading partners, draw manufacturing jobs back to U.S. shores and shrink a $1.2 trillion U.S. goods trade deficit, which were among his key campaign promises.

Without the instant leverage provided by the tariffs of 10% to 54% that Trump declared under the International Emergency Economic Powers Act (IEEPA) -- which is meant to address "unusual and extraordinary" threats during a national emergency -- the Trump administration would have to take a slower approach of lengthier trade investigations under other trade laws to back its tariff threats.

The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the duties and the other by 13 U.S. states.

The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, have said the tariffs will hurt their ability to do business.

"There is no question here of narrowly tailored relief; if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all," the trade court wrote in its decision.

At least five other legal challenges to the tariffs are pending.

Oregon Attorney General Dan Rayfield, a Democrat whose office is leading the states' lawsuit, called Trump's tariffs unlawful, reckless and economically devastating.

"This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim," Rayfield said in a statement.

Trump has claimed broad authority to set tariffs under IEEPA. The law has historically been used to impose sanctions on enemies of the U.S. or freeze their assets. Trump is the first U.S. president to use it to impose tariffs.

The Justice Department has said the lawsuits should be dismissed because the plaintiffs have not been harmed by tariffs that they have not yet paid, and because only Congress, not private businesses, can challenge a national emergency declared by the president under IEEPA.

In imposing the tariffs in early April, Trump called the trade deficit a national emergency that justified his 10% across-the-board tariff on all imports, with higher rates for countries with which the United States has the largest trade deficits, particularly China.

Many of those country-specific tariffs were paused a week later. The Trump administration on May 12 said it was also temporarily reducing the steepest tariffs on China while working on a longer-term trade deal. Both countries agreed to cut tariffs on each other for at least 90 days.

(Reporting by Dietrich Knauth and Daniel Wiessner; writing by Jonathan Allen; editing by Sandra Maler, Paul Thomasch and Leslie Adler)

Posted by: AAngeles