The federal appeals court, however, did not strike down the tariffs immediately, allowing the Donald Trump administration time to appeal to the Supreme Court

The federal appeals court, however, did not strike down the tariffs immediately, allowing the Donald Trump administration time to appeal to the Supreme Court

The federal appeals court, however, did not strike down the tariffs immediately, allowing the Donald Trump administration time to appeal to the Supreme Court

A federal appeals court ruled against President Donald Trump wide-ranging tariffs, saying he did not have the legal right to impose it, or import taxes, on nearly all countries. However, the court allowed the taxes to remain in place, and gave the Trump administration time to appeal to the Supreme Court.

The US Court of Appeals for the Federal Circuit said Trump could not use national emergencies to impose these tariffs. This ruling supported an earlier decision by a trade court in New York. The judges, in a 7-4 vote, said, "It seems unlikely that Congress intended to... grant the President unlimited authority to impose tariffs."

Trump has vowed to move the Supreme Court. In a post on TruthSocial, he wrote that the ruling, if upheld, would "literally destroy the United States of America". A White House spokesperson Kush Desai said Trump acted lawfully and expects to win.

This decision makes it harder for Trump to change US trade policy alone. He has other ways to impose import taxes, but they are slower and less severe. His tariffs, and the roll-out process, have rattled global markets, and have also angered US trading partners and allies. Concerns about higher prices and slower economic growth, too, have risen.

Despite this, Trump used these tariffs to pressure countries like the European Union and Japan, seeking one-sided trade deals. The tariffs also brought tens of billions of dollars into the federal Treasury, helping pay for large tax cuts.

An expert, Ashley Akers, noted that this ruling could weaken the US negotiating position. Foreign governments might resist future demands or renegotiate existing deals. The government also warned that if the tariffs are stopped, it might have to refund collected import taxes. This would harm the US Treasury. Trump had previously claimed ending them would lead to "a GREAT DEPRESSION!"

By July, tariffs had generated $159 billion, twice the amount from the previous year. The Justice Department even warned that revoking the tariffs could mean "financial ruin" for the US.

The court's ruling applies to two sets of import taxes. Trump justified both by declaring a national emergency under the 1977 International Emergency Economic Powers Act (IEEPA):

1

"Liberation Day" Tariffs: Announced April 2, these included up to 50 per cent on countries with a trade deficit with the US, and 10 per cent for most others. Trump said the "emergency" was the long-standing US trade deficit.

2

"Trafficking Tariffs": Announced February 1, these targeted imports from Canada, China, and Mexico. Trump aimed to stop illegal drug and immigrant flows, calling this a national emergency.

The US Constitution gives Congress the power to set taxes, including tariffs. But over decades, presidents have gained more authority. Trump used this expanded power.

However, Trump's claim that IEEPA gave him unlimited power to tax imports faced many legal challenges. No president had used IEEPA for tariffs before. It was mainly used for sanctions against countries like Iran. Those who sued argued that IEEPA doesn't permit tariffs. They also pointed out that a trade deficit isn't an "unusual and extraordinary" threat. The US has had trade deficits for 49 years.

Trump's administration argued that courts had approved President Richard Nixon's emergency tariffs in 1971. Nixon used an older law from 1917. But in May, a New York trade court disagreed. It ruled that Trump's "Liberation Day" tariffs went beyond his authority under IEEPA. This court combined lawsuits from several businesses and states. For the "trafficking tariffs," the court found they didn't properly address the problems they claimed to solve, as required by IEEPA.

This court challenge does not include all Trump's tariffs. For example, those on steel, aluminium, and cars, based on national security concerns, are separate. Tariffs on China, started by Trump and continued by President Joe Biden due to unfair trade practices, are also not part of this ruling.

Trump could still use other, more limited laws to impose import taxes. For instance, a 1974 trade law (Section 122) allows 15 per cent tariffs for 150 days on countries with big trade deficits. Another part of that law (Section 301) permits tariffs on countries with unfair trade practices. Trump used Section 301 to start his trade war with China.

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