A federal court has determined that many of Donald Trump’s tariffs are unlawful. The US Court of Appeals ruled on Friday that Trump’s reciprocal tariffs, imposed on nearly all US trading partners, are being applied illegally.
In April, President Trump outlined his plan to levy taxes on nations he believed had historically engaged in “unfair” trade practices with the US. This included a uniform 10 percent tariff on imports from various countries.
This ruling follows a May decision by the Court of International Trade, which dismissed Trump’s assertion that his tariffs were justified under the International Emergency Economic Powers Act (IEEPA). Trump had claimed that the trade imbalance threatened US national security, creating a national emergency.
While the appeals court declared the tariffs illegal, it did not immediately stop them, allowing them to continue until October 14. After this date, they would no longer be enforceable, though a challenge in the US Supreme Court might follow.
The appellate court, in a 7-4 ruling, upheld a lower court’s decision that Trump did not have the authority to impose worldwide tariffs. The judges concluded that the IEEPA, cited by Trump to justify the move, did not grant the power to impose tariffs or similar taxes.
The BBC reported that the IEEPA grants a US president the power to address a national emergency or major foreign threat. The 1977 law allows for economic measures to counteract “any unusual and extraordinary threat” originating outside the United States.
In the past, Presidents Barack Obama and Joe Biden invoked the IEEPA to impose sanctions on Russia following its annexation of Crimea in 2014 and its invasion of Ukraine.
However, the appeals court concluded that the emergency law does not grant the president “wide-ranging authority to impose tariffs,” as the IEEPA does not mention tariffs and lacks clear procedural limits on such powers.
After the ruling, Trump criticized the court on his Truth Social account, calling it “highly partisan” and labeling the decision a “disaster” for the US. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote.
Trump suggested the case would proceed to the Supreme Court, stating on social media: “Tariffs were allowed to be used against us by our uncaring and unwise Politicians. Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again!”
Given the Supreme Court’s conservative majority, with six of nine justices appointed by Republican presidents, Trump might be hopeful for a favorable outcome. However, if the Supreme Court upholds the appellate decision, it could lead to greater uncertainty in the financial markets.
Additionally, questions may arise about whether the US must return billions collected through import taxes and what the future holds for trading partners like the UK, Japan, and South Korea, which had reached agreements before the August deadline.