Economy

Trump’s Tariffs Under Fire: Appeals Court Limits Presidential Emergency Powers

Court: Trump’s tariffs are illegal overreach of power. Supreme Court challenge expected, tariffs in place till October.

August 30, 2025, 9:39 AM

A 3D illustration depicts global economic turmoil with the United States amidst a tariff crisis, representing trade wars and import/export taxes.

The complex web of US global tariffs and trade wars creates economic uncertainty worldwide, as illustrated in this 3D rendering. By Miami Daily Life / MiamiDaily.Life.

Executive Summary

A federal appeals court ruled that most of President Trump’s “reciprocal tariffs” are an illegal overreach of his emergency powers under the International Emergency Economic Powers Act (IEEPA).

The court affirmed that the IEEPA does not grant the president authority to impose tariffs, emphasizing that the power to tax belongs exclusively to Congress.

The tariffs will remain in place until mid-October, as the case is widely expected to proceed to the U.S. Supreme Court, potentially causing uncertainty in financial markets.

The Story So Far

The current legal challenge stems from President Donald Trump’s imposition of “reciprocal tariffs” on various countries, which he justified by citing a national emergency under the International Emergency Economic Powers Act (IEEPA). However, a federal appeals court has ruled these tariffs illegal, asserting that the IEEPA does not grant the president the power to impose tariffs, as this authority is constitutionally reserved for Congress, making the ruling a significant blow to a key part of Trump’s economic policy.

Why This Matters

The federal appeals court’s ruling, which deems most of President Trump’s “reciprocal tariffs” an illegal overreach of presidential emergency powers, significantly challenges the executive’s authority in trade policy and reinforces Congress’s exclusive power over taxation. This decision, if affirmed by the Supreme Court, could introduce substantial uncertainty into financial and global markets, potentially impacting the U.S. economy and setting a crucial precedent for future presidential actions using emergency powers.

Who Thinks What?

The federal appeals court, upholding a lower court’s finding, ruled that President Donald Trump’s “reciprocal tariffs” are an illegal overreach of emergency powers, stating that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to impose tariffs or tax, as that power belongs exclusively to Congress.

President Trump rejected the judgment, calling the appeals court “highly partisan” and the ruling a “disaster” for the country, asserting that a trade imbalance constituted a national emergency justifying the tariffs, and plans to challenge the decision in the U.S. Supreme Court.

A federal appeals court has ruled that most of President Donald Trump’s “reciprocal tariffs,” imposed on nearly every country the U.S. trades with, are an illegal overreach of his emergency powers. The U.S. Court of Appeals issued its decision on Friday, upholding a lower court’s finding that the International Emergency Economic Powers Act (IEEPA) does not grant the president the authority to impose such tariffs. While the ruling does not immediately halt the tariffs, they are set to remain in place until mid-October, likely setting the stage for a challenge in the U.S. Supreme Court.

Court’s Reasoning and Authority

In a 7-4 decision, the appellate court affirmed the Court of International Trade’s earlier finding that President Trump lacked the authority to impose these global tariffs. The judges stated that the IEEPA, the law Trump used to justify the policies, “did not give the president wide-ranging authority to impose tariffs.” They clarified that the act does not grant “the power to impose tariffs, duties, or the like, or the power to tax.”

The court emphasized that the power of the purse, including the authority to tax, belongs exclusively to Congress. Donald Trump had argued that a trade imbalance constituted a national emergency harmful to U.S. national security, thereby justifying the tariffs under the decades-old act. However, the court ruled that imposing tariffs falls outside the president’s mandate in this context.

President Trump’s Response and Potential Impact

President Trump immediately rejected the judgment, calling the appeals court “highly partisan” and the ruling a “disaster” for the country. The decision represents a significant setback to a centerpiece of his economic agenda.

Beyond its legal implications, the federal appeals court ruling could have an immediate impact on the U.S. economy, with potential knock-on effects felt in global markets. Uncertainty could arise in financial markets if the Supreme Court ultimately affirms the decision.

Next Steps and Affected Tariffs

The case is now widely expected to proceed to the U.S. Supreme Court, a challenge President Trump has already signaled on Truth Social. The conservative majority on America’s highest court could potentially make it more likely to side with the president’s view.

This ruling specifically affects Trump’s “reciprocal tariffs,” which encompass a patchwork of different rates on most countries globally. Imports on nearly all goods from nearly every country with which the U.S. conducts trade will remain in place until mid-October. Separately, the tariffs previously imposed on steel, aluminum, and copper are not affected by this ruling and will remain intact.

The federal appeals court’s decision represents a significant legal challenge to President Trump’s use of emergency powers for tariff imposition, underscoring the constitutional division of powers concerning taxation. While the tariffs remain in effect temporarily, the impending Supreme Court review will be a critical determinant of their long-term legality and economic impact.