The United States Court of Appeals for the Federal Circuit has ruled that most of President Donald Trump’s tariffs are illegal.
The court affirmed a lower court’s finding that Trump exceeded his authority by using the International Emergency Economic Powers Act (IEEPA) to enact broad import taxes, which the majority opinion described as an unauthorised expansion of executive power.
The tariffs remain in effect despite the 7-to-4 decision handed down on 29 August. The appeals court stayed its decision until 14 October, to prevent immediate economic disruption and to provide the Trump administration with time to pursue an appeal to the Supreme Court.
The stay maintains the status quo, allowing the duties to continue being collected on imports from countries such as China, Canada, and Mexico while the legal process unfolds. The court noted that an abrupt invalidation could cause uncertainty in international trade relations and harm businesses reliant on stable policy.
On 2 April, Trump issued an executive order imposing “reciprocal tariffs” starting at a minimum of 10% on imports from nearly all US trading partners, with adjustments made during negotiations. These were justified under the IEEPA, a 1977 law that allows the president to regulate international economic transactions during declared national emergencies. Additional tariffs targeted goods from China, Canada, and Mexico, specifically linked to efforts to curb the flow of fentanyl and precursor chemicals.
The tariffs generated significant revenue, with Treasury Department data showing more than $142 billion collected by July, which the administration credited with reducing trade deficits and supporting US manufacturing. However, they also faced widespread criticism for raising costs on consumers and businesses. Small businesses reported financial harm from increased import duties.
Democratic-led states and coalitions of importers filed lawsuits, arguing that the tariffs violated constitutional separations of power by encroaching on Congress’s authority over taxation and trade.
At least seven legal challenges emerged, consolidated in the US Court of International Trade (CIT). On 28 May, the CIT issued a ruling declaring the tariffs unlawful. The CIT held that the IEEPA does not confer “unbounded authority” on the president to impose tariffs, because the law is meant for targeted responses to foreign threats, not broad economic policy shifts.
The court permanently enjoined the reciprocal and drug trafficking-related tariffs but spared those on steel, aluminium, motor vehicles, and vehicle parts imposed under section 232 of the Trade Expansion Act. Another federal court in Washington DC reached a similar conclusion on 29 May, in a related case.
The Trump administration appealed these decisions to the Federal Circuit, warning in pre-ruling letters that invalidating the tariffs would have “catastrophic consequences” for US leverage in global negotiations.
Legal issues at stake
The Federal Circuit case centred on the scope of presidential authority under the IEEPA and the constitutional allocation of powers over trade and taxation.
Challengers, including small businesses and states such as California, contended that Trump’s use of the IEEPA represented an unprecedented expansion of executive power. They argued that the law, enacted to address emergencies such as foreign threats, does not explicitly authorise tariffs, which are taxes and thus fall under Congress’s purview as outlined in Article I of the Constitution.
“Tariffs are a tax, and the framers of the Constitution expressly contemplated the exclusive grant of taxing power to the legislative branch,” the majority opinion stated.
The court applied the “major questions doctrine”, a principle from recent Supreme Court precedents, to determine that Congress did not intend for the IEEPA to allow such transformative actions without clear authorisation.
The majority emphasised that the IEEPA’s grant to “regulate” imports does not extend to imposing duties of unlimited scope, amount, and duration.
“It seems unlikely that Congress intended to … grant the president unlimited authority to impose tariffs,” the judges wrote. This ruling reinforced congressional primacy over trade policy and highlighted concerns about executive overreach in economic matters.
The four dissenting judges, including a mix of Democratic and Republican appointees, argued that the IEEPA’s broad provisions justify the tariffs in the context of foreign affairs and national emergencies.
Judge Kimberly Moore authored a forceful dissent, contending that the majority’s interpretation unduly limits executive discretion and overlooks procedural safeguards Congress built into the law. The dissenters viewed the tariffs as within the president’s authority to respond to threats such as unfair trade practices and drug trafficking.
Trump responds
Trump posted on Truth Social shortly after the ruling: “All tariffs are still in effect! Today a highly partisan appeals Court incorrectly said that our tariffs should be removed, but they know the United States of America will win in the end.”
He further stated, “If the tariffs are removed, it will be a total disaster for the country. I will appeal to the Supreme Court.” Trump warned that blocking the tariffs would make the US “financially weak”.
White House spokesperson Kush Desai issued a statement: “President Trump lawfully exercised the tariff powers granted to him by Congress to defend our national and economic security from foreign threats. The president’s tariffs remain in effect, and we look forward to ultimate victory on this matter.”
Supreme Court review likely
The case is widely expected to proceed to the Supreme Court. The Federal Circuit’s stay until 14 October provides a window for the administration to file a petition for a judicial review. Legal experts anticipate the Supreme Court will grant review because of the ruling’s implications for separation of powers, executive authority, and trade policy.
If the Supreme Court upholds the decision, it could require refunds of billions in collected duties and limit future presidents’ use of the IEEPA for similar measures. Conversely, a reversal would affirm broad presidential discretion in emergency economic actions.
