Court Limits Trump's Tariff Power, Challenges Executive Overreach in Trade

A federal appeals court has ruled that a significant portion of President Donald Trump’s tariffs are illegal, marking a major legal setback for a cornerstone of his trade strategy. The U.S. Court of Appeals for the Federal Circuit, in a 7-4 decision, determined that Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA) when imposing sweeping “reciprocal” tariffs on nearly all U.S. trading partners, as well as targeted tariffs on China, Canada, and Mexico [2]. The ruling aligns with a prior decision from the U.S. Court of International Trade, which had also concluded that Trump’s use of the emergency powers law did not grant him the authority to impose such broad and high tariffs [1].

The court highlighted that IEEPA does not explicitly authorize the president to impose tariffs or duties, and that such authority is constitutionally reserved for Congress. “Tariffs are a core Congressional power,” the court stated, adding that the tariffs imposed by Trump “are unbounded in scope, amount, and duration” [2]. This legal interpretation is further supported by the Supreme Court’s “major questions doctrine,” which has increasingly been used to challenge executive overreach on matters with vast economic consequences [2]. The ruling also invalidated the fentanyl-related tariffs on China, Canada, and Mexico, which Trump had imposed under the same emergency powers [1].

The decision does not immediately halt the tariffs but suspends their enforceability until October 14, allowing the Trump administration to seek a review from the Supreme Court. The administration has indicated it will appeal, with President Trump condemning the ruling as “Highly Partisan” and warning that it could “literally destroy the United States of America” [2]. White House spokesperson Kush Desai stated that the tariffs “remain in effect” and that the administration is “looking forward to ultimate victory on this matter” [2].

The ruling raises significant financial and economic questions, particularly regarding the $107 billion in customs duties collected between February and July of this year [2]. If the Supreme Court affirms the appeal court’s decision, the U.S. government may be required to refund a large portion of these funds, creating a complex logistical and legal process involving importers and trade partners. Businesses, trade groups, and affected countries have already signaled hesitation, fearing uncertainty over future trade agreements and potential retaliatory measures [1].

Political analysts warn that the outcome of the Supreme Court case could shape not only Trump’s re-election prospects but also the broader balance of power between the executive and legislative branches. If the court overturns the ruling, it could embolden future administrations to invoke emergency powers for expansive economic measures. Conversely, a ruling in favor of the lower court would reinforce constitutional limits on presidential authority and set a precedent for judicial oversight of trade policy [1].

Trump’s tariffs have reshaped U.S. trade relationships, with deals negotiated with the European Union, Japan, and South Korea now hanging in limbo. The uncertainty has also impacted global markets, with importers and exporters delaying decisions while the legal process unfolds. As the case moves toward the Supreme Court, the financial and diplomatic repercussions will depend heavily on the final outcome.

Source: [1] What happens next after Trump tariffs ruled illegal? (https://www.bbc.com/news/articles/cy983g8jr5do) [2] Federal appeals court strikes down major chunk of Trump's ... (https://www.politico.com/news/2025/08/29/federal-appeals-court-strikes-down-major-chunk-of-trumps-tariffs-00537643) [3] Most Trump tariffs ruled illegal by appeals court (https://www.cnbc.com/2025/08/29/trump-trade-tariffs-appeals-court-ieepa.html)