Are Trump’s Tariffs on Shaky Legal Ground? Appeals Court Deals Major Blow to Emergency-Powered Trade Measures

Highlights:

• A federal appeals court rules that most of Trump’s tariffs exceeded legal authority under the International Emergency Economic Powers Act (IEEPA).

• The 7–4 decision allows tariffs to remain in place until October 14, giving time for appeals, including a likely Supreme Court review.

• The ruling underscores deep constitutional tensions over executive power, statutory limits, and the role of Congress in trade policy.

The Legal Tipping Point: Executive Power vs. Statutory Limits

A U.S. Court of Appeals ruled on August 29, 2025, that most of the sweeping tariffs imposed by former President Donald Trump are illegal, asserting that his actions went beyond the authority granted under IEEPA. The court emphasized that while the statute allows for regulation of imports during a national emergency, it does not explicitly authorize tariffs—highlighting such authority as a core power retained by Congress.

The ruling affirmed an earlier decision by the U.S. Court of International Trade, which had already struck down similar tariff orders in May 2025. That case concluded that IEEPA neither explicitly nor implicitly delegated “unlimited tariff authority” to the president and that Congress must set clear guidelines for such powers.

What Remains in Place—For Now

Despite declaring the tariffs unlawful, the appeals court issued a temporary stay, allowing most of the challenged duties to remain in effect until October 14. This window gives the administration time to petition the U.S. Supreme Court, which is widely expected to weigh in on the long-term boundaries of presidential trade powers.

The delay also preserves a fragile status quo for businesses, importers, and trading partners who have been navigating the uncertainty surrounding Trump’s global trade measures.

Market and Policy Ripples

Trump’s tariffs, which ranged from 10% to 25% on goods from China, Canada, Mexico, and other major partners, generated significant volatility in global trade. U.S. businesses faced higher input costs, supply chain disruptions, and increased uncertainty, while some industries benefitted from temporary protections.

For investors, the court’s ruling raises both risks and opportunities. Should tariffs be struck down entirely, importers could be owed tens of billions of dollars in rebates, potentially boosting liquidity in certain sectors. At the same time, the rollback of protective barriers could place competitive pressure on U.S. manufacturers that had adjusted operations under tariff protection.

Strategic and Psychological Undercurrents

Politically, the White House denounced the decision as partisan. Former President Trump called it a “total disaster,” while Attorney General Pam Bondi pledged to appeal, warning that the ruling undermines America’s global standing.

Beyond politics, the decision could shape future interpretations of the “major questions doctrine,” which requires explicit congressional approval for sweeping policies with vast economic or political significance. For investors and executives, the ruling adds another layer of unpredictability to trade strategy, nudging market psychology toward defensive positioning and safe-haven assets.

A Forward View: What to Watch Next

The next several weeks will be decisive. Market participants are closely monitoring three fronts: whether the Supreme Court accepts the appeal, how Congress responds to the constitutional challenge, and what economic fallout may occur if tariffs are rolled back.

If the high court curtails presidential use of emergency powers for trade, it could reshape decades of executive-driven trade policy. Meanwhile, industries and importers are calculating the potential impact of tariff refunds and the risks of a sudden shift in competitive dynamics.

This moment marks more than just a legal dispute over tariffs—it is a pivotal test of how the United States balances executive agility with statutory restraint, and how global markets adapt to that evolving framework.