Trump Tariffs Federal Court Ruling: Federal Court Rules Policies Illegal, Sparking Supreme Court Showdown
A federal appeals court in Washington, D.C., delivered a stunning blow to President Donald Trump’s trade agenda on Friday, ruling that most of his sweeping tariff policies are illegal. The decision, which found that Trump overstepped his presidential authority, could reshape U.S. trade policy and is likely headed for a high-stakes battle in the Supreme Court.
The U.S. Court of Appeals for the Federal Circuit, in a 7-4 decision, declared that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs was unlawful. The court stated that U.S. law grants the president significant powers to act during a national emergency but does not explicitly allow the imposition of tariffs or taxes.
“The statute bestows significant authority on the president to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,” the ruling said.
Trump’s tariffs, described as “unbounded in scope, amount, and duration,” were deemed to exceed the limits of the IEEPA. The court emphasized that the law lacks any mention of tariffs or procedural safeguards to limit the president’s ability to impose them. This ruling marks the most significant challenge yet to Trump’s aggressive trade policies, which have been a cornerstone of his economic strategy.
The court’s decision specifically targets Trump’s “Liberation Day” tariffs, announced on April 2, 2025, which imposed a 10% baseline tariff on nearly all U.S. trading partners. It also voids his “reciprocal” tariffs, which targeted countries Trump claimed were unfairly treating the U.S. in trade dealings. These measures were justified by the Trump administration as responses to national emergencies, including trade deficits, fentanyl trafficking, and immigration issues.
However, the court rejected these justifications, stating, “It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the president unlimited authority to impose tariffs.” The ruling underscores that Congress, not the president, holds the constitutional authority to impose taxes and tariffs, and any delegation of that power must be explicit and limited.
The decision will not take effect immediately, as the court granted a stay until October 14, 2025, to allow the Trump administration time to appeal to the Supreme Court. This delay ensures that the tariffs remain in place for now, preserving the status quo as the legal battle continues.
Trump responded swiftly on social media, posting shortly after the ruling was announced, “ALL TARIFFS ARE STILL IN EFFECT!” In a lengthy statement, he accused the appeals court of political bias, calling the decision “highly partisan” and warning that it could “literally destroy the United States of America.” He defended his tariffs as essential for supporting American workers and companies producing “MADE IN AMERICA products,” especially ahead of the Labor Day weekend.
The White House echoed Trump’s defiance, with spokesman Kush Desai asserting that the president “lawfully exercised the tariff powers granted to him by Congress to defend our national and economic security from foreign threats.” Desai expressed confidence in an eventual victory, stating, “We look forward to ultimate victory on this matter.”
The ruling stems from a case known as V.O.S. Selections Inc. v. Trump, which was first heard by the U.S. Court of International Trade in May 2025. That court initially ruled that Trump’s tariffs exceeded his authority, a decision temporarily paused pending the appeal. The Federal Circuit’s oral arguments on July 31 revealed judges’ skepticism, with one noting that the IEEPA “doesn *’t even say ‘tariffs’” or mention them explicitly.
The case was brought by a coalition of small businesses and 12 Democratic-led states, who argued that Trump’s tariffs were economically harmful. Small businesses, in particular, claimed the tariffs were “devastating” to their operations, disrupting supply chains and increasing costs. The court’s ruling supported their position, noting that Congress typically uses “clear and precise terms” in statutes that delegate tariff authority, which the IEEPA lacks.
The Trump administration had anticipated this outcome, with reports indicating it was preparing alternative strategies to maintain the tariffs. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Secretary of State Marco Rubio had warned that invalidating the tariffs immediately could cause a “dangerous diplomatic embarrassment” for the U.S. William Reinsch, a former commerce official, told reporters that the administration was likely developing a “Plan B” to keep the tariffs in place using other legal authorities.
Trump’s tariffs have caused widespread economic and political uncertainty, raising fears of inflation and straining relations with trading partners. The policies have been used as leverage in trade negotiations, with Trump securing tentative deals with countries like the United Kingdom and China. However, the broader goal of ratifying numerous trade agreements remains elusive.
The ruling does not affect all of Trump’s tariffs. Industry-specific levies on steel, aluminum, and automobiles, imposed under different legal authorities, remain untouched. Still, the decision could embolden further legal challenges, such as one filed by California Governor Gavin Newsom, who called the tariffs “illegal, full stop.”
As the case heads toward the Supreme Court, its outcome could redefine the balance of power between the president and Congress on trade policy. Legal experts point to recent Supreme Court decisions, like the 2023 ruling against President Joe Biden’s student loan forgiveness plan, which limited executive authority on major economic issues. These precedents suggest Trump’s claims to broad tariff powers may face an uphill battle.
For now, American businesses and consumers face continued uncertainty as the legal fight unfolds. The Supreme Court’s decision, expected to address weighty constitutional questions, will likely determine the future of Trump’s trade agenda and its impact on the U.S. economy.
