U.S. Court Limits Trump's Tariff Power, Reigniting Battle Over Executive Authority

The U.S. Court of Appeals has ruled that most of Donald Trump’s global tariffs, often referred to as reciprocal tariffs, exceed his authority under emergency economic powers, marking a significant legal challenge to the policy’s legality. The court’s 7-4 decision on Friday upheld a prior ruling by the U.S. Court of International Trade, which similarly rejected Trump’s use of the International Emergency Economic Powers Act (IEEPA) to justify the imposition of tariffs on nearly all trading partners [1]. This ruling does not immediately remove the tariffs but sets a deadline for their potential enforcement halt by mid-October, pending further legal action in the U.S. Supreme Court [1].

The ruling centers around the IEEPA, a 1977 law that empowers the president to respond to national emergencies or threats from abroad. Trump repeatedly invoked this law during his presidency to impose tariffs he argued were necessary to address trade imbalances threatening U.S. national security. However, the appeals court found that the IEEPA does not grant the president the authority to impose tariffs or duties, nor does it include procedural safeguards to limit presidential power on such matters [1]. The decision underscores a clear legal distinction between presidential emergency powers and the authority to levy taxes, which the court emphasized resides with Congress.

Trump has vocally criticized the ruling, calling it a “disaster” for the country and claiming it threatens U.S. economic sovereignty. He has indicated plans to appeal to the Supreme Court, where a conservative-leaning bench could influence the final outcome. The Supreme Court’s involvement raises broader questions about executive power and the limits of the IEEPA, particularly in a political climate where similar legal challenges to presidential actions have been increasingly scrutinized [1]. For example, during the Biden administration, the court expanded the “major questions doctrine” to invalidate policies that extended existing laws into major policy areas without clear congressional authorization [1].

Economically, the ruling could have wide-reaching implications for U.S. businesses and global markets. Tariffs affect trade flows and corporate profitability by increasing costs for imported goods. The decision introduces uncertainty for companies that rely on imports, potentially deterring business activity with the U.S. until the Supreme Court rules definitively. Dr. Linda Yueh, an economist from Oxford University and the London Business School, noted that the ambiguity could “dampen down economic activity” as international partners wait for resolution [1].

The outcome of the Supreme Court case could also reshape Trump’s political standing and the legacy of his trade policy. A reversal of the appeals court decision would strengthen his position as a policy enforcer and could set a precedent for future executive actions under the IEEPA. However, an affirmation of the ruling would challenge his authority and diminish the perceived effectiveness of his trade agenda. The court’s decision is expected to influence not only current tariffs but also future trade negotiations and the enforceability of reciprocal trade agreements [1].

Source: [1] What happens next after Trump tariffs ruled illegal? (https://www.bbc.com/news/articles/cy983g8jr5do)