Former President Donald Trump is facing a big legal challenge to his use of tariffs. On Thursday, a federal appeals court will hear oral arguments in this influential lawsuit. The issue at the heart of the debate is the letters Trump has been sending world leaders. He provided details on new tariff rates that their exports to the United States will encounter beginning August 1. Beyond the immediate effects, these U.S.T.R. ramifications of this lawsuit could recast the entire arena of U.S. trade policy and affect Trump’s legacy.
Trump’s administration argues that this far-reaching authority to impose tariffs is rooted in the International Emergency Economic Powers Act (IEEPA). More general in scope, this law provides the executive branch with broad authority to respond quickly and effectively to national emergencies. To complicate the legal landscape even more, in invoking this power, Trump also initiated a trade agreement with the United Kingdom.
The former president’s imposition of a 50% tariff on Brazilian imports was the last straw. Until now, this maneuver had been considered authorized under IEEPA powers. About a month ago, a three-judge panel instead ruled that some tariffs imposed by Trump were illegal under the same law. This ruling casts an increasing shadow over the legality of Trump’s trade policies and their ongoing ability to survive judicial review.
Trump has repeatedly described his correspondence with world leaders as the same thing as forging bilateral trade agreements. He finds that these communications effectively establish new tariff rates. They’re just one piece of a much larger strategy to protect American workers and strengthen our national security. In response to that criticism, White House spokesman Kush Desai came to the administration’s defense. He promised, “The Administration is using tariff powers granted legally and legitimately to the executive branch by the Constitution and Congress. Today’s action restores fair competition to American workers and protects our national security.”
Critics say that Trump’s intended actions still go beyond what is legally permissible under IEEPA. Trump’s attorneys have contended that “IEEPA nowhere mentions tariffs, duties, imposts, or taxes, and no other President in the statute’s nearly 50-year history has claimed that it authorizes tariffs.” This legal argument is at the heart of the ongoing legal challenge. It goes straight for the jugular—taking aim at the core fundamental underpinning of Trump’s tariff powers.
As this new court ruling is set to have especially strong effects on Trump. Even more broadly, it has the potential to remake U.S. trade policy. If the Supreme Court ultimately rules against him, “all of the trade deals Trump has reached in recent weeks — and those he will reach in the coming days — are illegal,” according to economist Steven Blitz. As Marks noted, even Trump’s personally signed letters notifying other countries of their predatory new tariffs imposed and the reciprocal retaliatory tariffs they’ve proposed are in jeopardy.
The timeline for what could be a very complicated legal battle is indeed urgent. Trump’s reciprocal tariffs on dozens of countries’ imports were first unveiled in early April but have faced multiple postponements. With the August 1 start date for these tariffs looming closer, they have the potential to make an already difficult situation worse.
That’s a huge win for DC, which has been crushed under Trump’s administration thumb by U.S. District Judge Rudolph Contreras. This unexpected decision resulted from a federal court case in Washington D.C. Contreras decided that the law does not give Trump the authority to take unilateral tariff actions. This leaves Trump in even worse legal shape on the matter.
The U.S. Court of Appeals for the Federal Circuit had previously stayed a ruling. That decision had the potential to remove Trump’s protectionist tariffs. This temporary respite should be seen as the judiciary’s prudence in the face of increasing jockeying for the supremacy of executive authority in trade policy.
As Trump works his way through this legal labyrinth, the jury is out—literally and figuratively—on the former president’s chances in court. U.S. policy analysts from Piper Sandler predict that “Trump will probably continue to lose in the lower courts, and we believe the Supreme Court is highly unlikely to rule in his favor.” This agreement among scholars indicates a difficult path forward for Trump as he continues to try to uphold his tariff powers.
Ted Murphy, an economic analyst, went a step further in his testimony, saying, “I believe the tariffs are imperiled.” He emphasized the risky unpredictability of Trump’s trade policies, now the subject of increasing legal scrutiny.