What's Happening?
The U.S. Court of Appeals for the Federal Circuit has ruled that President Trump cannot impose broad tariffs of unlimited duration using the International Emergency Economic Powers Act (IEEPA). The decision, made on August 29, 2025, affirmed the U.S. Court of International Trade's ruling that such tariffs are unlawful. The ruling affects tariffs imposed on Canada, Mexico, and China related to fentanyl trafficking and border security, as well as 'reciprocal' tariffs addressing trade imbalances. The court has stayed immediate enforcement to allow the Trump Administration time to appeal to the U.S. Supreme Court. This decision does not impact tariffs imposed under other legal authorities, such as those against steel and aluminum under Section 232 of the Trade Expansion Act of 1962.
Why It's Important?
The ruling has significant implications for U.S. trade policy and economic relations. If upheld, it could lead to the removal of tariffs that have been a cornerstone of President Trump's trade strategy, potentially affecting international trade dynamics and U.S. economic interests. Businesses and states opposing the tariffs may need to file lawsuits to seek relief, which could lead to widespread legal challenges. The decision underscores the limits of presidential authority in imposing tariffs, emphasizing the constitutional role of Congress in such matters. The outcome of the appeal could shape future trade policies and the balance of power between the executive and legislative branches.
What's Next?
The Trump Administration plans to appeal the decision to the Supreme Court, which could further delay any changes to the current tariff regime. If the Supreme Court upholds the ruling, the Administration may explore other legal avenues to impose tariffs, such as Section 338 of the Smoot-Hawley Tariff Act of 1930. Importers and affected parties are advised to monitor developments closely and consult legal counsel regarding potential refunds and litigation strategies.
