NEW YORK CITY. New York: A U.S. appeals court has delivered a significant blow to one of President Donald Trump’s signature economic tools, ruling that most of his tariffs were imposed illegally under a law that does not grant presidents the authority to levy duties.
The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., in a 7-4 decision, said Trump had exceeded his powers by invoking the International Emergency Economic Powers Act (IEEPA) to justify tariffs on a wide range of imports. While the court allowed the tariffs to remain in place until October 14 to give the administration time to appeal to the Supreme Court, the ruling casts doubt on the legal foundation of Trump’s broader trade agenda.
The IEEPA, enacted in 1977, was designed to let presidents freeze assets or impose sanctions in response to “unusual and extraordinary” national emergencies. However, the appeals court said nothing in the statute explicitly authorizes tariffs or taxes. “It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs,” the majority wrote.
Trump has leaned heavily on tariffs in his second term, using them to pressure trading partners and renegotiate deals. He has defended them as a way to address trade deficits, revive U.S. manufacturing, and combat cross-border drug flows. His February levies on China, Canada, and Mexico were linked to fentanyl trafficking, while his April “reciprocal tariffs” were tied to long-running trade imbalances.
The ruling does not affect Trump’s duties on steel, aluminum, and other imports imposed under different statutes, but it heightens uncertainty for businesses already wary of policy swings. “The last thing the market or corporate America needs is more uncertainty on trade,” said Art Hogan, chief market strategist at B. Riley Wealth.
Trump quickly blasted the decision, calling the court “highly partisan” on Truth Social. “If these Tariffs ever went away, it would be a total disaster for the Country,” he wrote, predicting the Supreme Court would ultimately side with him.
The Justice Department has argued that IEEPA’s provisions allowing the president to “regulate” imports gave Trump sufficient authority. However, critics, including 12 Democratic-led states and several small businesses that brought the lawsuits, said tariffs are a form of taxation — a power reserved for Congress under the Constitution.
The ruling marks just one front in Trump’s widening legal battles over economic policy. He is also locked in a confrontation with the Federal Reserve over his attempt to fire Governor Lisa Cook, raising fears about central bank independence. “I think it puts Trump’s entire economic agenda on a potential collision course with the Supreme Court. It’s unlike anything we’ve seen ever,” said Josh Lipsky of the Atlantic Council.
Trump allies suggest he may try to reimpose tariffs under different statutes if the Supreme Court strikes down IEEPA-based duties. “The administration has been anticipating this outcome and is preparing a Plan B,” said William Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies.
The tariffs remain in force for now, but the clock is ticking toward a potential high-stakes showdown at the nation’s highest court.