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 Truth Social, 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.
Despite this, Trump used these tariffs to pressure the European Union, Japan and other coutries into accepting one-sided trade deals. The tariffs also brought billions of dollars into the federal Treasury, helping pay for large tax cuts.
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 2025, 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 on 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 on February 1, these targeted imports from Canada, China, and Mexico. Trump aimed to stop illegal drug and immigrant flows, calling it a national emergency.
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The US Constitution gives Congress the power to set taxes, including tariffs. But over the years, presidents have gained more authority, which Trump used.
However, his claim that IEEPA gave him unlimited power to tax imports faced several 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 does not permit tariffs. They also pointed out that a trade deficit is not 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 did not properly address the problems they claimed to solve, as required by IEEPA.
