US Appeals Court Rules Trump Overstepped Authority on Tariffs, But Keeps Them Temporarily in Place

Washington, D.C. – In a significant legal setback for President Donald Trump, the U.S. Court of Appeals for the Federal Circuit ruled on Friday that he exceeded his authority in imposing sweeping tariffs on nearly all U.S. trading partners. However, the court allowed the tariffs to remain in place temporarily, giving the administration time to appeal to the Supreme Court.

The 7–4 decision largely upheld a May ruling by the U.S. Court of International Trade in New York, which found that Trump’s so-called “Liberation Day tariffs” went beyond the powers granted under the 1977 International Emergency Economic Powers Act (IEEPA). Trump had invoked the statute to declare America’s trade deficits a “national emergency,” justifying tariffs as high as 50% on countries with which the U.S. runs a deficit and a standard 10% levy on most others.

Which tariffs are affected?
The ruling applies to tariffs Trump imposed in April on almost all U.S. trading partners, as well as earlier duties on China, Mexico, and Canada. While some countries, including the UK, Japan, and the EU, struck one-sided deals to avoid harsher penalties, others such as Laos and Algeria were hit with steep duties in recent weeks.

Why did the court rule against Trump?
Judges rejected the administration’s reliance on emergency powers, ruling that Congress never intended to grant presidents unlimited authority to impose tariffs. The appeals court stressed that Trump’s sweeping measures exceeded any authority under IEEPA. Challenges to the tariffs were filed jointly by a coalition of U.S. businesses and 12 states.

What’s next?
The decision leaves Trump with the option of taking the case to the Supreme Court. A dissenting opinion from four judges suggested the president could still have legal grounds, potentially giving Trump a path forward. In response, Trump vowed to appeal, warning on social media that the decision “would literally destroy the United States of America” if upheld.

Meanwhile, the Justice Department has cautioned that overturning the tariffs could force the government to refund billions in import duties already collected. Tariff revenue reached $159 billion by July, more than double the previous year, underscoring what is at stake for U.S. finances.

Alternative legal options
If the Supreme Court does not side with Trump, his administration still has other, more limited tools. Under the Trade Act of 1974, the president can impose tariffs up to 15% for 150 days against countries with large trade deficits. Similarly, Section 232 of the Trade Expansion Act of 1962 allows tariffs on national security grounds but requires a Commerce Department investigation, reducing presidential discretion.

Trade experts say the administration has been anticipating the ruling. “It’s common knowledge the administration has been preparing a Plan B, presumably to keep the tariffs in place under other statutes,” said William Reinsch, a former senior Commerce Department official now with the Center for Strategic and International Studies.

For now, the ruling leaves U.S. trade policy in limbo, with markets, businesses, and foreign governments awaiting the next move from both the courts and the White House.