In a ruling that could reshape America’s trade policy and curb presidential authority, the US Court of Appeals has dealt a significant blow to Donald Trump’s sweeping use of emergency powers to impose tariffs on nearly all major trading partners, setting the stage for a high-stakes Supreme Court battle that could determine not only the future of Trump’s trade agenda but also the constitutional limits of executive power in shaping global commerce.
Washington: A landmark decision by the U.S. Court of Appeals for the Federal Circuit has dealt a major blow to President Donald Trump’s aggressive tariff regime, raising critical questions about the limits of executive power in trade policy and the future of America’s economic diplomacy. The court ruled in a 7-4 decision that Trump exceeded his legal authority when he declared national emergencies to justify imposing sweeping import tariffs on nearly every U.S. trading partner, effectively bypassing Congress.
While the ruling upheld an earlier decision by the U.S. Court of International Trade in New York, it did not immediately dismantle the tariffs, instead granting the administration time to appeal to the Supreme Court. This outcome gives Trump a narrow legal opening to sustain his controversial trade agenda, but also sets the stage for a constitutional battle over the separation of powers in economic governance.
The dispute originates from Trump’s April 2 tariff package, which he branded “Liberation Day.” That plan levied reciprocal tariffs of up to 50 percent on countries with which the United States recorded a trade deficit and slapped a baseline 10 percent duty on almost all other nations. Trump justified his sweeping action under the International Emergency Economic Powers Act (IEEPA) of 1977, arguing that America’s long-standing trade deficits amounted to a national emergency.
Earlier, he had also invoked the same law to impose tariffs on Canada, Mexico, and China, linking the measures to drug smuggling and illegal migration across U.S. borders. The administration defended this approach by citing precedent from Richard Nixon’s use of emergency tariff powers during the economic turbulence of the 1970s, when the gold standard collapsed. But the appeals court rejected Trump’s interpretation, emphasizing that Congress likely never intended to grant a president unchecked authority to impose tariffs under the guise of emergency declarations.
For Trump, the court’s ruling represents a major setback, undermining both his economic and political narratives. His tariff policies have long rattled global financial markets, created uncertainty for U.S. businesses, and stoked fears of higher consumer prices and slower economic growth. While some allies like the United Kingdom, Japan, and the European Union conceded to new trade terms to avoid harsher penalties, others such as Laos and Algeria were hit with punitive tariffs of 40 and 30 percent respectively earlier this month. These actions bolstered Trump’s image as a hardline negotiator but also deepened tensions with global partners. The court’s ruling now threatens to weaken his bargaining position, as foreign governments may feel emboldened to resist U.S. demands or even revisit previously agreed trade terms.
The financial implications are equally significant. By July, Trump’s tariffs had generated $159 billion in revenue, more than double the intake from the previous year. The Justice Department has warned that striking down these measures could force Washington to refund billions in collected duties, a scenario officials described as risking “financial ruin” for the Treasury. This fear underscores how dependent the administration has become on tariff revenue, not only as a tool of foreign policy but as a fiscal buffer.
However, the court has drawn a sharp distinction between lawful tariff authority and overreach, noting that while the president does retain powers under statutes like the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, those powers are more limited, requiring specific conditions or investigations before duties can be applied.
Trump has already vowed to challenge the decision at the Supreme Court, warning on his social media platform that allowing the ruling to stand would “literally destroy the United States of America.” Yet the legal landscape he faces is narrower than before. The Trade Act of 1974, for instance, allows tariffs of only up to 15 percent and for a duration of just 150 days, while Section 232 requires Commerce Department investigations to prove that imports threaten national security. These constraints would reduce Trump’s ability to swiftly and unilaterally impose sweeping trade barriers, a hallmark of his economic policy.
Ultimately, the ruling has introduced a critical inflection point in America’s trade strategy. If the Supreme Court upholds the lower court’s interpretation, it could restore greater congressional authority over tariffs, rebalancing the distribution of power between the executive and legislative branches. For U.S. businesses, consumers, and international partners, such an outcome could bring stability after years of erratic trade policy.
But if Trump prevails, it would cement an expanded vision of presidential power in economic matters, potentially reshaping global trade relations for years to come. At stake is not just the fate of Trump’s tariffs, but the broader constitutional question of how far a president can stretch emergency powers to redefine America’s place in the world economy.