A federal appeals court has handed a major blow to President Trump’s broad tariff strategy by ruling that many of the sweeping tariffs he imposed earlier this year through emergency powers are unlawful. This ruling challenges a key pillar of Trump’s trade agenda and raises the prospect that the U.S. Treasury may be required to refund billions of dollars in duties already collected from American businesses.
Back in April, Trump leveraged the International Emergency Economic Powers Act (IEEPA), a law dating from 1977 designed for use during national emergencies, to impose high tariffs on a wide range of countries. These tariffs hit some countries with duties as steep as 50%, and others, such as China, with tariffs reaching 145%. The administration argued that the U.S. trade deficit and other economic issues constituted a national emergency, justifying the use of emergency powers to enforce what Trump called “reciprocal tariffs” to address unfair trade practices.
However, on August 29, a federal appeals court overturned these tariffs, ruling that the president had exceeded his legal authority. The court emphasized that the Constitution reserves the power to levy taxes and tariffs exclusively for Congress, and that the IEEPA does not grant the president unfettered authority to impose such broad tariffs. This decision, by a 7-4 vote, largely confirmed a prior ruling by the U.S. Court of International Trade and declared the tariffs invalid under the law.
Despite the decision, the tariffs remain in place temporarily until October 14. This stay allows the Trump administration time to appeal the ruling to the U.S. Supreme Court, where the final fate of these tariffs will be decided. Trump has signaled his intention to push for an expedited Supreme Court review and insists the tariffs are essential to protect American economic and national security interests. His spokesperson and administration officials have defended the tariff program as key to confronting threats from unfair trade practices.
This deeply unsettles businesses and international trade partners. American companies have paid over $210 billion in tariffs as of late August, a massive sum that courts have now found the administration had no authority to collect. If the Supreme Court upholds the ruling, it could compel the Treasury to “give back” these funds, representing a major financial disruption for government coffers and added uncertainty for companies that have already been burdened by the tariffs.
The tariffs have had significant ripple effects through global supply chains and international relationships, prompting concerns about retaliation from other countries and jeopardizing ongoing trade negotiations with the European Union, United Kingdom, and Japan. U.S. trade officials warn that invalidating the tariffs could cause “dangerous diplomatic embarrassment” and disturb fragile trade discussions, while also removing a central tool in Trump’s trade policy arsenal.
Legal experts note that while Trump still retains some more limited authority to impose tariffs under other statutes like the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, these options limit the severity and speed of tariffs and require formal investigations. Such constraints may make it much harder for the administration to pursue aggressive trade defense actions like those launched under the IEEPA.
The ruling is also a rare judicial check on presidential power. Critics argue it reasserts constitutional limits on executive authority, reminding the government that significant fiscal decisions such as taxation require congressional involvement. The court’s detailed analysis finds no indication Congress intended to permit the president to use emergency powers as a shortcut to impose vast tariffs without oversight.
For now, businesses and foreign governments are left in limbo, as the tariffs technically continue to apply but their future hangs on the Supreme Court’s decision. Companies have been frontloading imports to mitigate the impact, and many remain cautious about investment and supply chain strategies given the uncertainty.
The legal saga illustrates the tension between executive ambition and constitutional limits in navigating global trade challenges. Should the Supreme Court invalidate these tariffs, the administration will have to chart a new course, one more tightly bound to existing laws and with potentially less flexibility to impose trade penalties on a wide scale.
