US court finds Trump's tariffs 'illegal', but levies in place for now

Federal judges ruled Trump exceeded authority by invoking emergency law, but tariffs remain in place pending further appeals to the Supreme Court

US President Donald Trump’s sweeping global tariffs suffered a major legal blow on Friday after a federal appeals court ruled that he overstepped his powers by imposing them under emergency provisions.

 

In a 7-4 decision, the US Court of Appeals for the Federal Circuit found that Trump wrongly invoked the International Emergency Economic Powers Act (IEEPA) to justify levies on imports from nearly every country. The judges emphasised that Congress never intended to give the president unlimited authority to impose tariffs. 

 

The ruling upheld a May 30 judgment by the US Court of International Trade, which concluded that Trump had misused IEEPA, affirming that tariff powers rest with Congress under the Constitution. During the July 31 hearings, Federal Circuit judges also expressed scepticism about Trump’s expansive interpretation of the law.

 

Court applies ‘major questions doctrine’

In reaching its decision, the appeals court cited earlier Supreme Court rulings that blocked former President Joe Biden’s efforts on climate change and student debt relief. In those cases, the conservative majority relied on the “major questions doctrine”, which requires clear congressional approval for executive actions of vast political or economic significance.

 

Applying the same principle, the judges noted that IEEPA contains no explicit authorisation for tariffs. “Imposing tariffs is a matter of vast economic and political significance,” the court wrote, adding that the government must show clear congressional authority to justify such powers. 

 

Historically, IEEPA has been used to impose sanctions or freeze assets during genuine national emergencies, not to levy broad import duties.

Tariffs remain in force pending appeal

Despite ruling against Trump’s use of IEEPA, the Federal Circuit did not immediately strike down the tariffs. Instead, it allowed them to remain in place while the case proceeds, giving the administration time to seek Supreme Court review.

 

“ALL TARIFFS ARE STILL IN EFFECT!” Trump declared on his social media platform shortly after the verdict, describing the ruling as partisan and warning of “total disaster” if the duties were lifted.

Background to the dispute

Trump first announced what he called “Liberation Day” tariffs on April 2, 2025, introducing a 10 per cent baseline duty on most imports and higher “reciprocal” rates, up to 50 per cent, for countries running trade surpluses with the US.

 

Additional levies were later imposed on Canada, Mexico and China, citing drug trafficking and immigration concerns. Judges, however, ruled that trade deficits and border issues did not amount to the “extraordinary threats” required to justify emergency powers under IEEPA. 

Congress’s authority at issue

Under the US Constitution, the power to levy tariffs and taxes rests with Congress. While lawmakers have delegated certain trade authorities to presidents over time, the appeals court made clear that IEEPA is not one of them.

 

“The statute bestows significant authority on the President,” the court wrote, “but none of these actions explicitly include the power to impose tariffs or taxes.”

Economic and political impact

Trump has argued that his tariffs brought tens of billions of dollars into the Treasury and forced allies and rivals into signing trade agreements. By July, tariff revenues had topped $159 billion, more than double the amount collected at the same point last year. 

 

However, the unpredictable rollout unsettled global markets, strained US relations with key trading partners, and fuelled concerns over rising prices at home. If the levies are ultimately struck down, the government could face demands for refunds, potentially inflicting a major financial hit on the Treasury.

White House reaction and next steps

President Donald Trump denounced the ruling in a Truth Social post, insisting that all tariffs remain in force and pledging to seek relief from the Supreme Court. He labelled the appeals panel “highly partisan,” warned that scrapping the duties would be a “total disaster” that would “financially weaken” the United States, and argued that tariffs are “the best tool” to protect American workers and manufacturers.  Trump added that the US would no longer tolerate large trade deficits or unfair barriers imposed by “friend or foe,” vowing to “use them to the benefit of our nation” and to “make America rich, strong and powerful again.”

 

The White House maintains the tariffs were lawful measures to protect “national and economic security.” Spokesman Kush Desai said Trump had legitimately used powers granted by Congress to defend the country from foreign threats. He stressed that the tariffs remain in effect and expressed confidence of “ultimate victory” at the Supreme Court.

 

Legal analysts polled by Bloomberg, note that the administration could attempt to rely on narrower trade authorities, such as Section 301 of the Trade Act of 1974, which Trump used in his earlier tariff war with China. But such statutes lack the sweeping emergency powers he claimed under IEEPA.