A ruling from a US federal appeals court has deemed that Donald Trump overstepped his legal authority by imposing extensive tariffs on numerous countries, while still permitting his administration time to contest the decision. The US Court of Appeals for the Federal Circuit upholds a previous decision from May by a federal trade court in New York, stating that Congress did not intend to provide the President with unchecked power to levy tariffs.
The court’s majority opinion, delivered in a 7-4 ruling, indicated doubts about the constitutional basis for Trump’s action, particularly concerning the invocation of national emergencies under the International Emergency Economic Powers Act (IEEPA). Although the immediate implementation of the tariffs was not blocked, the judges expressed concern regarding the implication of Trump’s approach on US trade policy.
Trump has vowed to appeal the decision to the Supreme Court, asserting on social media that allowing the ruling to stand would “literally destroy the United States.” The White House maintains that Trump acted within his rights, expressing confidence in a future victory on the matter. Conversely, an attorney representing small businesses affected by the tariffs emphasised that the verdict underscores limitations on the President’s power regarding tariffs, thus protecting American enterprises and consumers from potential harm.
This ruling complicates Trump’s objective to radically transform American trade policy independently. While there are alternative legal frameworks to impose tariffs, they come with more stringent limitations. The current tariffs have disrupted global markets and fostered tensions with trade allies, leading to fears of inflation and diminished economic growth. Nonetheless, Trump has utilised these tariffs as leverage in negotiations for trade deals and has raised significant revenue for the federal Treasury.
Notably, the court’s dissent highlighted that there could be a legal avenue for Trump to pursue, suggesting that the 1977 law permitting emergency actions does not amount to an unconstitutional delegation of authority. Tariff revenues have reportedly reached $159 billion, doubling from the previous year.
The underlying legal challenge concerns tariffs imposed by Trump under the guise of a national emergency, justified by the long-standing US trade deficit. The tariffs, initially introduced on “Liberation Day” and later revised, imposed reciprocal rates on countries with which the US has deficits and baseline rates on others. The court previously ruled that the tariffs did not satisfy IEEPA’s emergency criteria, asserting that the persistent trade deficit does not constitute an “unusual and extraordinary” threat.
Overall, the court’s ruling questions the breadth of presidential power concerning trade and tariffs, amidst ongoing legal challenges regarding Trump’s approach.