A federal appeals court has declared nearly all of former President Donald Trump’s tariffs illegal, marking a significant legal setback for his administration’s trade policies. The decision, announced by a divided panel of the U.S. Court of Appeals, ruled 7-4 against the tariffs that Trump imposed using the International Emergency Economic Powers Act (IEEPA). In making this decision, the judges explained that the IEEPA does not provide authority for tariffs or other types of taxation.
The ruling is primarily bad news for Trump’s reticulate, neomercantilist tariff regime. This unilateral system is in effect on imports from nearly every country that exports to the United States. Unlike most broad tariffs, these tariffs target a wide variety of goods. Recession fears aside, many are concerned about their impact on the U.S. economy and global markets.
Indeed, Trump claimed that the trade deficit poses a danger to U.S. national security. He has invoked this rationale to trigger emergency powers and impose tariffs. The appeals court ruled that the IEEPA does not contain authority for tariff imposition. The judges emphasized that the law does not provide “the power to impose tariffs, duties, or the like, or the power to tax.”
Naturally, Trump responded to the ruling with semi-apoplectic fury. He criticized the appeals court as “highly partisan” and condemned the decision as a “disaster” for the nation. He stated, “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!”
This legal fight started after a May ruling from the Court of International Trade. That ruling knocked down Trump’s argument for his global tariffs—his use of emergency economic powers. The appeals court ruling leaves the door open for a potential appeal to the full U.S. Supreme Court. As it stands right now, the Trump administration has until mid-October to bring this challenge.
If the tariffs are not appealed by mid-October and remain in place then, they become permanently unenforceable. This latest delay adds to the uncertainty businesses will face as they attempt to cope with trade uncertainty amid protracted litigation over tariffs.
Dr. Linda Yueh, an economist, highlighted the potential ramifications of this ruling on businesses, stating, “Businesses are going to be subject to uncertainty.” This confusion would undoubtedly ripple through financial markets as firms recalibrate their business models in response to new trade policies.
If the appeals court decision is affirmed, it creates a new statutory interpretation that will save/feed expensive and immediate economic impacts. Beyond changing policy, it will hurt Trump’s political authority and his reputation as a dealmaker the most. The tariffs were a feature of his administration’s economic strategy and a feature he was bringing home as the pride of his presidency.