A federal appeals court has declared the majority of President Donald Trump’s import tariffs to the U.S. illegal, casting doubt on a key economic initiative of his second term.
The court’s decision, asserting that the president lacks the authority to impose such extensive tariffs, arrives at a crucial juncture in trade discussions prompted by the policy. Initial goals aimed to finalize negotiations with global trade partners, a deadline now unattainable.
Trump’s “Aggressive Tariff Plan” triggered a turbulent five months in global commerce, with trading partners responding with similar measures, and American consumers encountering increased costs for imported goods.
The court stated on Friday that the tariffs will remain in effect temporarily, allowing the government time to appeal the decision.
Trump’s far-reaching tariffs have been a prominent aspect of his presidency, though the rates and targets have frequently changed, causing uncertainty.
Trump has consistently maintained that his tariffs—particularly those on major imports—will eliminate trade deficits, end perceived unfair trading practices, and boost American employment.
Here’s what you need to know.
What the ruling says
The majority opinion stated that Trump’s tariffs exceed the authority granted to him under the International Emergency Economic Powers Act (IEEPA), which he used to implement them, and his authority as head of the executive branch.
The ruling stated the tariffs “assert an expansive authority that is beyond the express limitations.”
“Given these considerations, we conclude Congress, in enacting IEEPA, did not give the President wide-ranging authority to impose tariffs of the nature” levied by Trump, the ruling explains.
The court added that tariffs are generally a Congressional power: “Tariffs are a core Congressional power.”
This decision aligns with a May ruling by the U.S. Court of International Trade, which also found that Trump’s tariffs surpassed the limits of the IEPPA.
The IEEPA had not previously been used by a president to impose tariffs. It has been used for economic sanctions, granting the president power to address “unusual and extraordinary” threats during national emergencies, but the court ruled this does not extend to tariffs.
“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.
What tariffs does the ruling affect?
The ruling specifically addressed Trump’s “reciprocal tariffs” introduced on April 2, which Trump called “Liberation Day,” as well as “trafficking tariffs”—the tariffs against China, Canada, and Mexico imposed by Trump who argued that these nations weren’t adequately preventing fentanyl and drugs from entering the U.S.
“Both the Trafficking Tariffs and the Reciprocal Tariffs are unbounded in scope, amount, and duration,” the majority ruled.
Tariffs imposed by Trump based on different justifications, including those on steel, copper, and aluminum, will not be affected by the rulings.
What happens now?
The ruling will not take effect until Oct. 14, providing the Trump Administration with over a month to challenge it in court.
This ruling is just one of more than a half-dozen lawsuits challenging Trump’s use of the IEEPA to justify his foreign trade policy.
Trump indicated in a Truth Social post that the ruling will now go to the Supreme Court for a final decision on the legality of his tariffs and his expansion of executive power.
“ALL TARIFFS ARE STILL IN EFFECT!”, Trump posted on Truth Social on Friday after the ruling. He called the court “highly partisan” and said that removing the tariffs “would be a total disaster for the Country.”
“We should all remember that TARIFFS are the best tool to help our Workers, and support Companies that produce great MADE IN AMERICA products,” he continued.
“Tariffs were allowed to be used against us by our uncaring and unwise Politicians,” Trump wrote. “Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again!”
What does this mean for the economy?
Consumers have already felt the effects of Trump’s tariffs over the past few months, and as they remain in place, these effects will continue to spread.
Despite Trump’s claims that his policies will eventually benefit American consumers, shoppers are experiencing rising prices, as the U.S. wholesale price index rose last month. Many major retailers, including Walmart and BestBuy, have already started increasing prices in response to the tariffs, and they anticipate further increases as the impact fully takes effect.
Furthermore, as businesses learn about the ruling, their desire for stability diminishes as they await a potential definitive ruling that could determine the future of Trump’s tariffs for years to come.
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