Ruling Shakes US Trade Policy – Most Trump-Era Tariffs Deemed Illegal by Appeals Court

On August 29, 2025, a sweeping decision by the U.S. Court of Appeals for the Federal Circuit struck a major blow to former President Donald Trump’s trade agenda. In a 7–4 ruling, the court affirmed that the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful and beyond presidential authority. While the tariffs remain in force temporarily until October 14–15 to allow for an appeal, this decision opens the door to potential refunds and a high-stakes legal battle at the Supreme Court.

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Background: What is IEEPA?

The IEEPA, enacted in 1977, enables the president to act in declared national emergencies—typically involving asset freezes or economic sanctions—not to impose broad tariffs.

The “Liberation Day” Tariffs

On April 2, 2025 (styled as “Liberation Day”), Trump issued Executive Order 14257, imposing sweeping “reciprocal” tariffs on most trading partners—10% baseline and much higher for some countries. These were supported by emergency justifications such as trade deficits and the opioid crisis.

Five small U.S. businesses and a coalition of 12 states filed lawsuits, arguing that these actions lacked congressional authorization and were unconstitutional.(Wikipedia)

Lower Court’s Ruling

In May 2025, the U.S. Court of International Trade ruled that IEEPA did not authorize such tariffs and permanently enjoined enforcement of the Levies.

Appeals Court Affirmation—and Delay

In the August ruling, the Federal Circuit upheld the lower court’s findings—confirming the president lacked authority to levy tariffs under IEEPA.

However, the court stayed its judgment and allowed tariffs to remain in force until October 14–15, providing the administration time to mount a Supreme Court appeal.

What Tariffs Are Affected—and Which Are Not

Affected:

• The “liberation day” tariffs on most foreign goods, structured under IEEPA, including sweeping rates applied without legislative consent.

Unaffected:

• Levies imposed under other laws—such as steel and aluminum tariffs issued based on trade remedies or national security—remain intact.

Regarding India and Other Countries

Tariffs on India (e.g., 50% duty for Russian oil sourcing) and Brazil were enacted through separate provisions and remain unaffected by this ruling.

Implications and Reactions

Legal and Economic Fallout

If upheld, the decision could force the treasury to refund billions in tariffs and trigger legal challenges from importers impacted by the now-invalid levies.

Executive Authority & Precedent

The ruling fortifies constitutional checks on executive power—highlighting that the power to tax or set tariffs lies with Congress, not the president, under broad emergency powers

Trump’s Response

Trump slammed the verdict as a “total disaster for the country,” accusing the court of jeopardizing American economic and strategic interests. He vowed to take the fight to the Supreme Court.

Stakeholder Impact

• Small businesses and the 12 states behind the suit hailed the decision as a legal victory that protects American enterprise.
• Economists and global trade experts have remarked the tariffs caused inflation and supply chain disruptions, and this ruling underscores the fragility of executive overreach in trade matters.

What Comes Next?

1. Supreme Court Appeal
   The administration is expected to appeal. The Supreme Court may ultimately decide whether IEEPA justifies sweeping tariffs or if only Congress has that authority.
2. Lower Court Action
   The case will return to the Court of International Trade to determine remedies and whether importers qualify for refunds.(Wikipedia)
3. Trade Climate Uncertain
   Trading partners may pause negotiations until legal clarity is restored. Countries such as India, the EU, and Japan remain observant of the evolving legal landscape.
4. Policy Reform
   Congress may seek to tighten or more clearly define emergency trade powers, or reassert its authority in setting tariffs, reshaping executive-legislative checks.

Conclusion

The recent court decision marks a pivotal moment in U.S. trade and constitutional law. By striking down most Trump-era tariffs imposed under IEEPA, the ruling reasserts congressional authority in economic policymaking and sets a high-stakes path toward the Supreme Court. With tariffs held in limbo until mid-October, America’s future trade trajectory—and the balance of executive power—hang in the balance.