US appeals court rules most Trump tariffs unlawful, showdown looms at Supreme Court
A US federal appeals court delivered a major blow to Donald Trump’s trade agenda on Friday, declaring that most of the tariffs imposed during his presidency were not authorised by law.
The ruling strikes at one of the central pillars of Trump’s second-term economic and foreign policy, though the duties will remain in place for now as the administration prepares to appeal to the Supreme Court.
In a 7–4 decision, the Court of Appeals for the Federal Circuit concluded that Trump misused the International Emergency Economic Powers Act (IEEPA) when imposing levies on a wide range of imports.
The statute, enacted in 1977, had historically been reserved for freezing assets and imposing sanctions against adversaries during national emergencies, but Trump was the first president to invoke it to justify tariffs.
The panel held that while IEEPA gives the president broad authority to act in the face of “unusual and extraordinary” threats, it does not extend to creating or collecting taxes, duties or tariffs. “It seems unlikely that Congress intended to grant the president unlimited tariff powers under this statute,” the court said in its opinion.
The judgment specifically targeted two sets of tariffs: one announced in April as part of Trump’s trade war under the label of “reciprocal” measures, and another issued in February against China, Canada and Mexico, which the administration linked to cross-border fentanyl trafficking.
Other duties, such as those on steel and aluminium imposed under separate trade statutes, remain unaffected.
Trump blasted the decision as the product of a “highly partisan court” and warned on Truth Social that removing the tariffs would cause “total disaster” for the country. Even so, he expressed confidence that the Supreme Court, now with a conservative 6–3 majority, would reinstate his policy, predicting the levies would continue “to benefit America.”
The ruling deepens uncertainty over US trade policy. Analysts noted that the administration had anticipated such a defeat and is likely to pursue alternative legal avenues to keep tariffs intact.
William Reinsch, a former Commerce Department official now at the Centre for Strategic and International Studies, said: “It’s common knowledge the administration has been preparing a Plan B to maintain these measures through other statutes.”
Business reaction was muted in after-hours trading, but some market strategists voiced concern. “The last thing corporate America needs right now is more trade uncertainty,” said Art Hogan, chief market strategist at B. Riley Wealth.
The litigation stems from lawsuits filed by five small US businesses and a coalition of 12 Democratic-led states, all of which argued that Trump had exceeded his constitutional authority.
The Constitution grants Congress the power to regulate tariffs and taxes, and the plaintiffs argued that any delegation of this power must be narrow and explicit.
The legal battle is unfolding as Trump also challenges the independence of the Federal Reserve, with an attempt to remove Governor Lisa Cook. Together, the two disputes could set up an extraordinary confrontation at the Supreme Court over the scope of presidential power in economic affairs.
Josh Lipsky, director of international economics at the Atlantic Council, said the developments were unprecedented: “This potentially places Trump’s entire economic programme on a collision course with the Supreme Court. It’s unlike anything we have seen before.”
At least eight lawsuits have been filed challenging Trump’s use of IEEPA to impose tariffs. A three-judge panel of the US Court of International Trade in New York had already ruled against the measures in May, with even one judge appointed by Trump joining the majority.
A separate Washington court has reached a similar conclusion, and that ruling is also under appeal.
While the administration insists the tariffs were necessary to protect American industry and curb the flow of illegal drugs, critics say they have heightened volatility in financial markets and strained relations with trading partners.
For now, the measures remain in force, but their fate rests with the Supreme Court, setting up a defining test of the limits of presidential authority over trade.
Reuters
