A US federal appeals court has struck down a major pillar of Donald Trump’s trade policy, ruling that most of his sweeping tariffs on foreign imports were illegal. The decision, delivered in a 7-4 vote by the US Court of Appeals for the Federal Circuit, challenges Trump’s use of emergency powers to impose levies on countries including China, Mexico, and Canada. The ruling paves the way for a potential Supreme Court battle that could redefine presidential authority on trade and reshape America’s economic strategy.
Court Rejects Trump’s Tariff Powers
The case centered on Trump’s decision to impose so-called “reciprocal” tariffs, which slapped a baseline 10% duty on nearly every nation, along with targeted levies on key trading partners. Trump argued that the measures were justified under the International Emergency Economic Powers Act (IEEPA), a 1977 law allowing presidents to act against “unusual and extraordinary” threats.
The appeals court disagreed. In its 127-page opinion, the judges wrote that IEEPA neither mentions tariffs nor grants the president unlimited authority to set them. “Whenever Congress intends to delegate tariff powers to the president, it does so explicitly,” the ruling stated. Imposing taxes and duties, the judges stressed, is a “core Congressional power” and cannot be assumed under a general emergency framework.
The ruling invalidates most of Trump’s tariff program but leaves intact measures on steel and aluminum, which were imposed under a separate legal authority.
Lawsuits from Businesses and States
The decision followed lawsuits filed by small businesses and a coalition of US states who argued that Trump’s executive orders disrupted trade and increased costs.
In April, Trump had declared a “liberation day” from what he called unfair trade practices, unveiling tariffs that touched nearly every import. His administration claimed the levies were necessary to protect American industry and national security.
But businesses complained of higher input costs and retaliatory tariffs from trading partners. In May, the Court of International Trade in New York ruled the measures unlawful, but that ruling was paused pending appeal. Friday’s decision reinforces the lower court’s judgment, adding pressure on the administration to seek Supreme Court intervention.
Trump’s Response
Reacting on his Truth Social platform, Trump blasted the court as partisan and warned of economic collapse if the ruling is upheld.
“If allowed to stand, this decision would literally destroy the United States of America,” he wrote. “If these tariffs ever went away, it would be a total disaster for the country. It would make us financially weak, and we have to be strong.”
Trump has consistently argued that trade imbalances threaten US security, framing tariffs as both an economic and national defense tool. He maintains that China, Mexico, and Canada in particular exploit America’s open market, and that reciprocal tariffs are the only way to force fair trade.
White House Arguments and Warnings
Lawyers for the administration defended the tariffs as essential to preventing financial catastrophe. In submissions ahead of the ruling, they warned that stripping Trump of IEEPA authority could trigger a crisis similar to the 1929 Wall Street crash.
“Suddenly revoking the President’s tariff authority under IEEPA would have catastrophic consequences for our national security, foreign policy, and economy,” the lawyers argued. They further claimed that undoing existing tariff agreements could jeopardize payments already pledged by other countries, leading to “financial ruin.”
Impact on US Trade Partners
The appeals court decision throws into question trade agreements negotiated with countries that accepted reduced tariff rates under Trump’s program. Governments that altered policy or adjusted trade flows may now seek to renegotiate terms.
The ruling also invalidates tariffs on Canada, Mexico, and China that Trump said were necessary to curb drug imports. With those measures struck down, policymakers warn of potential instability in trade enforcement.
Still, tariffs on steel and aluminum remain in place, since those were imposed under Section 232 of the Trade Expansion Act, which explicitly authorizes presidential action in the name of national security.
Congressional Authority Restated
At the heart of the decision is the reaffirmation that tariff-setting is a legislative function. Judges wrote that when Congress has delegated such power to the executive branch in the past, it has used clear language. By contrast, the IEEPA was designed to let presidents freeze assets, block transactions, or restrict certain financial flows in emergencies — not to impose taxes on trade.
The ruling suggests Congress never intended to give presidents broad latitude to unilaterally rewrite tariff policy.
Supreme Court Likely to Decide
The appeals court delayed enforcement of its ruling until October 14 to give the White House time to petition the Supreme Court. Legal experts expect the case to reach the nation’s highest court, which in recent years has curbed presidential attempts to stretch existing laws into new areas.
The Supreme Court’s conservative majority has invoked the “major questions doctrine” to block Democratic efforts under President Joe Biden, including attempts to regulate greenhouse gas emissions and forgive student loan debt. The same principle may apply to Trump’s tariff regime, raising the question of whether his expansive use of emergency powers is another example of executive overreach.
Political and Legal Stakes
The case carries enormous political weight. Trump has made tariffs a signature of his “America First” agenda, framing them as vital to protecting US workers and industries. Rolling them back would not only dent his foreign policy legacy but also weaken his campaign narrative as he seeks another term.
The Supreme Court’s composition could play in his favor: six of its nine justices are Republican appointees, including three nominated by Trump himself. However, the justices have also demonstrated skepticism toward sweeping executive actions, regardless of party.
If the Court upholds the appeals ruling, it would reaffirm congressional supremacy in trade policy and restrict presidential flexibility in using tariffs as a geopolitical tool. If it reverses the decision, it could set a precedent for broader presidential control over economic policy in times of declared emergencies.