In a significant legal decision with major implications for global trade, a U.S. federal appeals court has ruled that a president’s use of a key emergency powers law to impose broad tariffs was illegal. The ruling, issued by the U.S. Court of Appeals for the Federal Circuit, represents a substantial blow to the president’s unilateral authority on trade policy and sets the stage for a likely showdown at the Supreme Court.

The Legal Basis and the Court’s Rejection

At the heart of the dispute is the International Emergency Economic Powers Act (IEEPA) of 1977. This law grants the president wide-ranging authority to regulate international financial transactions and seize assets during a declared national emergency. Historically, presidents have used IEEPA for purposes like imposing sanctions on foreign governments or freezing assets of terrorist groups.

However, the court found that the law does not explicitly grant the power to impose tariffs. The ruling stated that while IEEPA gives the president “significant authority,” the statute “neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President’s power to impose tariffs.” By using the law to levy duties on a wide array of goods from countries around the world, the court concluded that the president had overstepped his authority.

This decision upholds a fundamental constitutional principle: the power to lay and collect taxes, including tariffs, is vested in the legislative branch—Congress—not the executive. The court’s finding is a direct challenge to the administration’s argument that a “national emergency” over trade deficits or other issues gives the president carte blanche to act without congressional approval.

What Tariffs Are Affected?

The ruling primarily targets tariffs that were imposed under the IEEPA. This includes the sweeping reciprocal tariffs placed on numerous countries, as well as duties imposed on China, Canada, and Mexico based on declared national emergencies related to trade deficits and illegal immigration.

Importantly, this ruling does not affect tariffs imposed under other trade laws, such as Section 232 of the Trade Expansion Act of 1962 (used for national security-based tariffs on steel and aluminum) or Section 301 of the Trade Act of 1974. This distinction is crucial, as it leaves some of the most prominent tariffs in place while striking down others that were based on a more legally dubious foundation.

The Uncertain Road Ahead

While the court’s decision is a victory for proponents of congressional authority, its immediate impact is limited. The court has allowed the tariffs to remain in effect until mid-October, giving the administration time to appeal the case to the Supreme Court. The administration has already vowed to do so, promising a protracted legal battle that could redefine the limits of presidential power for years to come.

In the meantime, businesses, consumers, and foreign governments are left in a state of uncertainty. A final ruling against the tariffs could potentially trigger demands for refunds of billions of dollars in collected duties, a prospect the Justice Department has warned could have a significant financial impact.

This landmark ruling underscores the ongoing constitutional tension between the executive and legislative branches. It reinforces the idea that even in a declared emergency, a president’s power is not unlimited and must remain tethered to the specific authorities granted by Congress. The final word on this matter will now rest with the nation’s highest court. Sources