Appeals Court Limits Trump’s Power to Impose Broad Tariffs

The US Court of Appeals for the Federal Circuit decided in a 7-4 ruling on Aug. 29 that Trump exceeded his powers under the International Emergency Economic Powers Act (IEEPA) when imposing tariffs on nearly all trading partners. The decision largely affirms a May ruling by a New York trade court, though it stopped short of immediately striking down the tariffs, giving the administration time to appeal to the Supreme Court.

The case stems from legal challenges brought by Democratic-led states and small businesses, which argued that Trump bypassed Congress by relying on emergency powers. Trump first invoked the 1977 law to impose tariffs of up to 50% on countries with US trade deficits and a baseline 10% tariff on most others, branding the move “Liberation Day.”

While some nations, including the United Kingdom, Japan, and the European Union, negotiated exemptions through trade deals, others faced steep penalties, such as a 40% tariff on Laos and 30% on Algeria.

The appeals court emphasized that Congress likely never intended to give the president unlimited tariff authority. Judges who dissented argued otherwise, noting past Supreme Court precedents allowing Congress to delegate some tariff powers to the executive.

The ruling does not affect all of Trump’s tariffs. Levies on steel, aluminum, autos, and those placed on China during his first term were imposed under separate legal authorities.

Trump criticized the decision on Truth Social, calling the court “highly partisan” and warning of economic consequences if the tariffs are overturned. His administration has argued that striking them down could force the US Treasury to refund import duties, which reached US$159 billion by July.

Looking ahead, the president plans to appeal to the Supreme Court, though experts note that even if his tariffs are blocked, he could turn to other statutes such as the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962, though both would limit his discretion.

“This ruling presents a serious legal threat to one of Trump’s signature economic policies,” said Nigel Green, CEO, deVere Group. Still, analysts warn that while Trump may lose a powerful negotiating tool, his administration is likely to seek alternative avenues to tax imports and pressure trading partners.