U.S. Court Questions Legality Of Trump’s Emergency Tariffs

Trump’s Emergency Tariffs

A U.S. federal appeals court raised serious doubts on Thursday about the legality of former President Donald Trump’s tariffs on imported goods, questioning whether they were justified under his emergency powers.

The case is being heard by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. It involves “reciprocal” tariffs imposed in April by Trump on various U.S. trading partners, along with earlier tariffs on China, Canada, and Mexico announced in February.

Judges grilled government attorney Brett Shumate on how the International Emergency Economic Powers Act (IEEPA) — a 1977 law typically used to sanction foreign threats — could be used to justify tariffs.

“IEEPA doesn’t even mention tariffs,” one judge noted during the hearing.

Shumate argued that the law allows for “extraordinary authority” during national emergencies, including stopping imports, which he claimed extended to imposing tariffs.

However, businesses and 12 Democratic-led states disagreed, saying only Congress has the power to set tariffs, as the Constitution gives it control over taxes and trade.

Neal Katyal, representing the businesses, argued that interpreting “regulate” under IEEPA to include tariff-setting would massively expand presidential power.

This is the first time an appeals court is reviewing Trump’s use of IEEPA to levy tariffs — a key part of his foreign trade strategy. Trump has used tariffs to pressure nations over trade imbalances and illegal drug trafficking, though affected countries deny such accusations.

Shumate referenced a 1975 court case where President Nixon used tariffs to fight inflation. However, that case also limited how far a president could go, stating he could not impose any tariff rate he wanted.

Judges also pushed back on the claim that courts can’t review a president’s IEEPA actions, suggesting this would allow one law to override all existing trade laws.

Katyal noted that no trade law in over 200 years has granted a president such sweeping power, and that changes in law since the Nixon era make Trump’s interpretation invalid.

The case is being heard by all active judges of the Federal Circuit — eight appointed by Democratic presidents and three by Republicans. A ruling date is unclear, but the losing party is expected to appeal to the U.S. Supreme Court.

Economic and Trade Impact:

Tariff revenue hit a record $27 billion in June, topping $100 billion for the fiscal year.
This revenue helps offset losses from Trump’s recent tax cuts.
However, economists warn tariffs could raise consumer prices and reduce business profits.
Companies also face uncertainty in planning due to fluctuating trade policies.

In May, the U.S. Court of International Trade ruled in favor of the challengers, saying IEEPA does not justify tariffs meant to address long-term trade deficits.

Despite that ruling, the Federal Circuit has allowed the tariffs to remain in place during the appeal process.

These legal challenges do not affect tariffs applied under other laws, like those on steel and aluminum.

Trump’s team argues that limiting presidential tariff authority could hurt ongoing trade negotiations. Yet officials admit those talks have continued with little disruption.

Trump plans to raise tariffs again on August 1 for countries not entering new trade deals.

So far, at least seven lawsuits challenge Trump’s use of IEEPA for tariffs. No court has yet fully accepted his claim of unlimited emergency power.