A federal appeals court has dealt a significant blow to Donald Trump’s trade policy, ruling that most of the tariffs he imposed on nearly every US trading partner were unlawful.
In a 7-4 decision issued on Friday, the US Court of Appeals upheld a lower court ruling that found the former president had overstepped his authority by invoking the International Emergency Economic Powers Act (IEEPA) to justify his sweeping tariff measures. The judges determined that the decades-old emergency powers law “does not grant the power to impose tariffs, duties, or the like, or the power to tax.”
While the tariffs remain in place for now, the court set a deadline of mid-October, giving the administration time to appeal to the Supreme Court.
Trump, who has made tariffs a centrepiece of his economic agenda, immediately rejected the ruling. Writing on Truth Social, he called the decision “highly partisan” and a “disaster for the country.” He warned that if the judgment were allowed to stand, it would “literally destroy the United States of America.”
The IEEPA, enacted in 1977, allows presidents to take wide-ranging actions in response to national emergencies stemming from foreign threats. It has been used by previous administrations, including those of Barack Obama and Joe Biden, to impose sanctions on countries such as Russia. But the appeals court emphasised that the law contains no provisions for tariffs and that taxing authority belongs to Congress.
Trump had argued that trade imbalances posed a threat to national security and therefore constituted a national emergency under the statute. The judges rejected that reasoning, saying tariff powers must be explicitly granted by lawmakers.
Economists warned that the ruling could have immediate economic repercussions. “Businesses are going to be subject to uncertainty,” said Dr. Linda Yueh of Oxford University and the London Business School. She noted that trading partners may hesitate to strike new deals or expand trade with the US while awaiting a possible Supreme Court review, potentially dampening economic activity.
The case is now expected to head to the nation’s highest court. With six of its nine justices appointed by Republican presidents, including three by Trump, analysts say the outcome is far from certain. However, the Supreme Court has in recent years been cautious about executive overreach, striking down policies by both Democratic and Republican administrations when deemed beyond statutory authority.
If the tariffs are ultimately struck down, questions may arise over whether the US must refund billions of dollars collected in import duties. Ongoing and future trade negotiations could also be thrown into disarray.
Until October 14, Trump’s so-called “reciprocal tariffs” will remain in place, covering a broad range of imports from global trading partners. Tariffs on steel, aluminium, and copper, imposed under different legal provisions, are unaffected by the ruling.
