A federal appeals court has delivered a major blow to President Donald Trump’s trade agenda, ruling that the sweeping tariffs he imposed on imports under emergency powers were unconstitutional.
The decision not only challenges the foundation of his “reciprocal” tariff regime but also casts doubt on the scope of presidential authority in setting U.S. trade policy.
In a 7-4 decision on Friday, as reported by CNBC, the U.S. Court of Appeals for the Federal Circuit ruled that Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA), the law he used to justify imposing wide-ranging tariffs on countries including Canada, Mexico, and China.
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“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said in its majority opinion. “Tariffs are a core Congressional power.”
The ruling temporarily pauses enforcement until October 14, giving the Trump administration time to appeal to the U.S. Supreme Court, where the case could become a defining showdown over the limits of executive power in trade.
Trump responded swiftly, denouncing the Federal Circuit as “Highly Partisan” and vowing that the Supreme Court would vindicate him.
“If these Tariffs ever went away, it would be a total disaster for the Country,” he wrote on Truth Social. “If allowed to stand, this Decision would literally destroy the United States of America.”
White House spokesman Kush Desai reinforced that the tariffs remain in place for now, saying: “The President’s tariffs remain in effect, and we look forward to ultimate victory on this matter.”
The case against the tariffs
The ruling came in the consolidated case V.O.S. Selections v. Trump, which stemmed from lawsuits filed by more than a dozen states and several small businesses. The plaintiffs challenged Trump’s claim that IEEPA gave him virtually unlimited authority to impose tariffs on national security grounds.
“This decision protects American businesses and consumers from the uncertainty and harm caused by these unlawful tariffs,” said Jeffrey Schwab of the Liberty Justice Center, which represented small business plaintiffs.
His co-counsel, Neal Katyal, called the ruling a “powerful reaffirmation” of the Founders’ constitutional design. “Presidents must act within the rule of law,” Katyal said.
The Federal Circuit’s ruling followed an earlier decision in May by the U.S. Court of International Trade, which also struck down Trump’s tariffs as unlawful.
The appellate judges were highly critical of the breadth of Trump’s tariffs, which they said lacked any meaningful limits.
“Both the Trafficking Tariffs and the Reciprocal Tariffs are unbounded in scope, amount, and duration,” the court ruled. “These tariffs apply to nearly all articles imported into the United States, impose high rates which are ever-changing, and are not limited in duration.”
Trump’s administration had argued that IEEPA gave the president authority to impose tariffs to respond to emergencies such as fentanyl trafficking. That rationale was used to justify levies on imports from China, Mexico, and Canada.
But the judges rejected the administration’s claim, saying tariffs cannot be used as a blunt, unlimited tool under IEEPA.
A divided bench
Four judges dissented, arguing that the majority misinterpreted the law and that the plaintiffs failed to justify their request for summary judgment.
The case was heard by 11 of the Federal Circuit’s 12 judges. Judge Pauline Newman, 98, was absent, as she remains suspended amid a dispute over cognitive evaluations required by the court.
Political and economic stakes
The decision comes as the Trump administration continues to defend its tariffs as vital to U.S. economic and national security interests. Earlier Friday, Commerce Secretary Howard Lutnick filed a declaration warning that striking down the tariffs could cause “massive and irreparable harm” to U.S. strategic interests.
He argued the levies had reduced U.S. deficits and were critical to ongoing negotiations with foreign partners. “Such a ruling would threaten broader U.S. strategic interests at home and abroad, likely lead to retaliation, and derail critical ongoing negotiations with foreign-trading partners,” Lutnick said.
Trump has long pitched his tariffs as a cornerstone of his “America First” economic policy, arguing that they force trading partners to negotiate “fair” terms and protect U.S. manufacturers. But critics — including businesses, trade groups, and now federal courts — say the tariffs were sweeping, costly, and imposed without legal authority.
For now, Trump’s tariffs remain in effect while the administration readies its appeal to the Supreme Court. If the ruling stands, it would strip the president of a powerful trade tool he has relied on since his first term, and reassert congressional authority over tariff-setting.
The Supreme Court is expected to decide in the coming months whether it will take up the case. If it does, the decision could become a landmark ruling on presidential trade powers and reshape the balance between the White House and Congress in economic policymaking.
A U.S. appeals court ruled on Friday that most of the country’s sweeping new tariffs are illegal, setting up a potential Supreme Court showdown over the White House’s signature economic policy. The U.S. Court of Appeals for the Federal Circuit upheld a May ruling from a lower court, which said the administration overstepped its authority when it invoked the International Emergency Economic Powers Act to impose tariffs on trading partners. The decision keeps current tariffs in place until mid-October, however, to allow the White House to appeal.