Donald Trump's sweeping attempt to claim near-unchallenged authority over global trade has hit a wall back at home. A federal appeals court in the United
States on Friday ruled that the president had exceeded his powers when he used "national emergencies" as cover to levy tariffs on almost every nation and trading bloc. In its 7–4 decision, the court left the tariffs in place till October 14, giving the Trump administration a deadline to appeal to the Supreme Court. Trump's erratic tariff impositions had rattled financial markets across the world for months now. On April 2, which he dubbed as 'Liberation Day', the US President imposed so-called reciprocal tariffs of up to 50% on countries with which the United States runs a trade deficit and 10 per cent baseline tariffs on almost everybody else. The President later suspended the reciprocal tariffs for 90 days to give countries time to negotiate trade agreements with the United States — and reduce their barriers to American exports. Some countries like United Kingdom, Japan and the European Union agreed to lopsided deals with Trump to avoid even bigger tariffs. Those that didn't knuckle under got hit harder earlier this month. Now, with the judiciary stepping in, his signature economic weapon is under threat. Soon after the decision was announced on Friday afternoon, Trump denounced it as "highly partisan". "If allowed to stand, this Decision would literally destroy the United States of America", Trump wrote on Truth Social. Meanwhile, White House Deputy Press Secretary Kush Desai said, citing the temporary stay, "The President’s tariffs remain in effect, and we look forward to ultimate victory on this matter".
Why Trump's "national emergency" justification didn't stand in court
Trump justified the taxes under the 1977 International Emergency Economic Powers Act by declaring the United States' longstanding trade deficits "a national emergency." And he had used this even before his April blitz to impose tariffs on Canada, Mexico and China in February, citing the illegal flow of immigrants and drugs across the US border.
While the US Constitution gives Congress the power to set taxes, including tariffs, lawmakers have gradually let presidents assume more power over tariffs. Trump had made the most of this. The ruling however hinged on the Constitutional provision that gives Congress the power to impose tariffs, although it can delegate that power to the president.
"Tariffs are a core Congressional power", the appeals court's majority opinion said. "The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution", the seven judges ruled.
Could Trump be forced to refund import taxes he collected?
While Trump has made it clear that he will approach the Supreme Court to file an appeal, even if the justices take the case, the fight could drag on for months, prolonging uncertainty for businesses, consumers, and global markets.
At the same time, it could also give allies the time to reassess. Some countries had rushed into one-sided deals to dodge Trump's tariffs. Others held out. And Friday's ruling validates that gamble and could embolden more resistance to Washington's pressure tactics.
Moreover, the government has argued that if Trump's tariffs are struck down, it might have to refund some of the import taxes that it's collected, delivering a financial blow to the US Treasury.
Revenue from tariffs totalled USD 159 billion by July, more than double what it was at the same point the year before. The Justice Department warned in a legal filing this month that revoking the tariffs could mean "financial ruin" for the United States.
(With AP inputs)
