- A federal appeals court found President Trump exceeded his authority in using emergency powers to levy new tariffs.
- Trump officials say they'll seek a U.S. Supreme Court reversal of the ruling.
- Scores of new trade levies ranging from 10% to 50% took effect in early August.
A lower court decision that struck down a broad swath of new trade levies enacted by President Donald Trump was upheld by a federal appeals court last week in a ruling that appears headed for review by the U.S. Supreme Court.
In a 7-4 decision, the U.S. Court of Appeals for the Federal Circuit concurred with the U.S. Court of International Trade’s decision earlier this year that Trump’s reliance on the 1977 International Emergency Economic Powers Act to declare national emergencies as a basis for his authority to levy import taxes was improper. In its ruling, the appellate court judges noted Congress holds the exclusive power to assess such fees.
“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the ruling read. “Tariffs are a core Congressional power.”
Trump railed against the ruling on social media postings on Sunday, arguing his tariff strategy has bolstered the U.S. economy and led to a jump in international investment commitments.
“More than 15 Trillion Dollars will be invested in the USA, a RECORD,” Trump wrote in a Sunday posting to Truth Social. “Much of this investment is because of Tariffs. If a Radical Left Court is allowed to terminate these Tariffs, almost all of this investment, and much more, will be immediately cancelled! In many ways, we would become a Third World Nation, with no hope of GREATNESS again. TIME IS OF THE ESSENCE!!! President DJT.”
The appellate court decision, however, comes with an effective date of Oct. 14, a clause intended to give Trump’s legal team time to seek a reversal from the U.S. Supreme Court.
And that effort appears to be moving forward, according to U.S. Treasury Secretary Scott Bessent who told Reuters on Monday he was confident the court would uphold the administration’s tariffs but added that the White House has a backup plan if it renders the tariffs legally void, according to a report from Newsweek.
Who has the power to assess tariffs?
Back in May, a three-judge panel for the U.S. Court of International Trade said Congress has exclusive authority to set and regulate international commerce and that authority is not superseded by a president’s emergency powers declaration.
“The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage,” the panel wrote in its ruling, per Reuters. “That use is impermissible not because it is unwise or ineffective, but because (federal law) does not allow it.”
The ruling was in response to two lawsuits, one filed by a group of small retailers who argued their businesses had been harmed by the tariffs, and another group of 12 Democratic states.
Scores of new international trade tariffs, ranging from 10% to 50%, went into effect earlier this month.
Trump has argued that tariffs are an effective tool to incentivize manufacturing goods in the U.S. as well as protecting jobs and encouraging consumers to purchase domestic-made products. He’s also leveraged tariff increases to address the flow of illicit drugs and illegal immigrants across U.S. borders.
But economists warn that the added cost of imports will ultimately be paid by U.S. consumers. And while recent federal economic reports have so far shown only minimal impacts on the cost of goods amid inflation that has crept back up since the first of the year, the rash of new trade levies could end up driving future price increases.
What’s the latest on tariffs?
Just after midnight on Aug. 7, goods from more than 60 countries and the European Union became subject to tariff rates of at least 10% and ranging up to 50%. Goods from 39 countries, as well as the 27-member bloc of EU nations, now face trade fees of 15%. Import goods from 11 countries now have tariffs of 30% or more with Brazil seeing a top rate of 50%.
Earlier sector-specific tariffs also remain in place. Those include:
- 50% tariff on steel and aluminum imports
- 50% tariff on copper imports from 1 August
- 25% tariff on foreign-made cars and imported engines and other car parts
The trade court’s ruling, upheld with Friday’s appellate ruling, does not impact Trump’s sector tariffs.
There are also a number of tariff exemptions including, most notably, smartphones. Some import goods that include components made in the U.S. are also protected from tariff fees as are pharmaceutical products, though Trump has signaled that he’s considering a new levy on that sector.