Legal battle escalates as US appeals court rules against Trump’s tariffs

On the Dash:

• A federal appeals court ruled most of Trump’s tariffs illegal under the International Emergency Economic Powers Act.
• The levies remain temporarily in place through October 14 as the Trump administration considers a Supreme Court appeal.
• The ruling adds uncertainty to U.S. trade policy and could impact global trade deals and auto industry supply chains.

The U.S. Court of Appeals for the Federal Circuit ruled on Friday that the majority of President Donald Trump’s tariffs are illegal. The court will allow the tariffs to remain in place until October 14 to provide the Trump administration time to submit an appeal to the Supreme Court.

The court’s 7-4 decision questioned the legality of Trump’s tariffs issued under the International Emergency Economic Powers Act. The IEEPA grants the president authority to “regulate a variety of economic transactions” following the declaration of a national emergency. The judges found that the IEEPA does not include the power to impose tariffs, ruling that President Trump overstepped his authority.

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However, the ruling does not impact other tariffs, including Trump’s steel and aluminum levies, which were issued under separate legal authority.

Trump’s global tariff policy has been a cornerstone of his U.S. foreign policy and a key negotiation tactic to persuade other nations to renegotiate trade deals and invest in the United States.

“More than 15 Trillion Dollars will be invested in the USA, a RECORD. Much of this investment is because of Tariffs,” Trump wrote on Truth Social. “If a Radical Left Court is allowed to terminate these Tariffs, almost all of this investment, and much more, will be immediately cancelled! In many ways, we would become a Third World Nation, with no hope of GREATNESS again.”

The president declared a national emergency in April, citing trade imbalances, dwindling U.S. manufacturing and the cross-border flow of drugs from Mexico and Canada. The administration is reportedly preparing a “Plan B” to maintain tariffs through other statutes, in case the Supreme Court rules against the levies.

Legal experts warn that if the Supreme Court ultimately strikes down the tariffs, the ramifications could reach hundreds of billions of dollars in refunds.