A major component of President Donald Trump’s protectionist trade policy has been invalidated by a U.S. federal appeals court. In a significant ruling, the court found that his administration’s use of emergency powers to impose widespread tariffs on goods from around the world, including from key allies, was an overreach of executive authority and therefore illegal.
The decision, handed down by the U.S. Court of Appeals for the Federal Circuit, specifically targets the use of the International Emergency Economic Powers Act (IEEPA) as the legal basis for these levies. The court determined that this 1977 law, designed for sanctioning enemies during crises like war or terrorism, was never intended by Congress to serve as a tool for setting broad import duties based on trade deficits.
This ruling throws into disarray numerous informal trade agreements Trump secured with nations like Japan and the European Union, which were made under the threat of these now-illegal tariffs. The court noted that IEEPA lacks any language mentioning tariffs or procedural safeguards to limit such presidential power, making its application in this context a departure from established legal and congressional practice.
While Trump has vowed an immediate appeal to the Supreme Court, the decision creates significant uncertainty. Importers who have paid billions under these levies may be entitled to refunds, a complex issue the lower courts must now address. The ruling does not, however, affect separate tariffs on steel and aluminum imposed under a different law, the Trade Expansion Act.