Federal Appeals Court Blocks Trump’s Tariffs, Sparking Legal Battle Over Trade Authority

In a significant legal setback for former President Donald Trump, a federal appeals court has ruled against the sweeping tariffs he imposed on multiple countries, casting doubt on his claim of near-unlimited power to raise tariffs without Congressional approval.

The U.S. Court of Appeals for the Federal Circuit issued a 7-4 decision overturning part of an earlier ruling by a specialized federal trade court in New York and striking down the controversial tariffs immediately. This ruling comes after Trump’s administration had implemented so-called “reciprocal tariffs” of up to 50% on countries with which the U.S. runs a trade deficit, and 10% baseline tariffs on nearly all other trading partners starting April 2, 2025.

While the appeals court upheld much of the New York court’s reasoning, it notably concluded that the legal foundation for Trump’s expansive tariff measures was invalid. The tariffs had been imposed under the International Emergency Economic Powers Act (IEEPA), a statute traditionally used for sanctions rather than broad tariff authority. The court questioned whether Congress ever intended to delegate such sweeping tariff powers to the president without legislative oversight.

This ruling disrupts Trump’s aggressive trade policies in which he had suspended some reciprocal tariffs to induce negotiating partners such as the European Union, United Kingdom, and Japan to strike trade agreements more favorable to the U.S. Those countries struck deals to avoid the higher tariffs, but the court’s decision now places these arrangements in a legal gray area.

Legal Basis and Implications

The key legal issue revolves around whether the IEEPA statute authorizes the president to impose tariffs unilaterally as a response to trade deficits deemed an international economic emergency. Lower courts and the appeals court have leanings against this interpretation, noting that the statute’s language does not explicitly mention tariffs and has traditionally been applied to financial sanctions of foreign threats.

Additionally, the court highlighted that other statutes granting tariff authority to the president, such as Section 232 of the Trade Expansion Act of 1962, require Commerce Department investigations and cannot be exercised at the president’s sole discretion. Trump’s use of IEEPA to justify tariff actions was viewed as legally uncharted and precarious.

The court has allowed the tariffs to remain temporarily in place until October 14, giving the Trump administration time to appeal the decision to the U.S. Supreme Court. Should the highest court accept the case, it will delve into the boundaries of executive power in trade policy, particularly the extent of Congressional delegation of tariff authority.

Reactions and Economic Impact

The ruling marks a challenge to one of the former president’s defining economic policies that unsettled global markets. Financial markets, businesses, and consumers have grappled with uncertainty and rising costs linked to the tariffs, with concerns about slower economic growth mounting.

Trade experts and legal analysts suggest that if the Supreme Court upholds the appeals court’s ruling, it would curtail presidential authority to impose tariffs broadly without explicit Congressional sanction. Alternatively, the administration could pivot to using other legal avenues, like Section 232, which mandates investigations and restrictions based on national security considerations.

Overall, this court decision reshapes the ongoing debate about the balance of power in U.S. trade policy, reaffirming Congressional prerogatives and limiting unilateral executive actions that have global economic repercussions.