US appeals court rules Trump’s tariffs illegal, keeps them in place pending appeal

A US federal appeals court has ruled that President Donald Trump exceeded his authority in imposing sweeping tariffs under emergency powers, striking a major blow to one of his signature economic policies.

In a 7–4 decision on Friday (August 29), the US Court of Appeals for the Federal Circuit declared that Trump improperly invoked the 1977 International Emergency Economic Powers Act (IEEPA) to levy tariffs on foreign goods, saying the law does not authorise the president to impose taxes or duties.

“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court noted.

Despite the ruling, the tariffs will remain in place until October 14 to allow the Trump administration to appeal to the Supreme Court.

The decision stems from lawsuits filed by small businesses and a coalition of US states after Trump’s 2024 executive orders imposed a 10% tariff on nearly all countries, along with reciprocal tariffs on others. Companies, including VOS Selections Inc and Plastic Services and Products, argued Trump had “no authority to issue across-the-board worldwide tariffs without congressional approval.”

While the ruling invalidates tariffs on China, Canada, Mexico, and other nations imposed under IEEPA, it does not affect duties on steel, aluminium, or certain China-specific tariffs that were authorised under other trade laws and upheld by the Biden administration.

Trump reacted angrily to the ruling on Truth Social, writing, “If allowed to stand, this decision would literally destroy the United States of America.” He added, “Today, a highly partisan appeals court incorrectly said that our tariffs should be removed, but they know the United States of America will win in the end.”

Attorney General Pam Bondi confirmed the Justice Department will appeal, accusing the judges of undermining US authority.

Treasury Secretary Scott Bessent warned of “dangerous diplomatic embarrassment,” while Commerce Secretary Howard Lutnick said the ruling could “derail critical ongoing negotiations” with trading partners.

The case could have major financial implications, potentially requiring the US Treasury to refund billions collected from importers.

Analysts also say it weakens Washington’s leverage in trade talks. “The administration could lose a pillar of its negotiating strategy, which may embolden foreign governments to resist future demands,” said Ashley Akers, a former Justice Department trial lawyer.

Even if the ruling stands, Trump retains other tools to impose tariffs, such as Section 301 of the 1974 Trade Act or Section 232 of the 1962 trade law — mechanisms previously used to target unfair trade practices and protect US industries.