Federal Court Strikes Down Trump Tariffs, Trade Markets Surge

The U.S. Court of Appeals for the Federal Circuit has sent shockwaves through global markets by striking down President Donald Trump's sweeping import duties with a decisive 7-4 ruling on August 29, 2025. The court determined that the International Emergency Economic Powers Act (IEEPA) does not give the President authority to impose such extensive tariffs on nearly all imported goods from almost all U.S. trading partners.

The decision on Trump's tariffs arrives at a crucial economic moment. These tariffs would have pushed the weighted average applied tariff rate to 19.4 percent - a level not seen since 1941. Economic projections show the rejected measures would have brought in $2.3 trillion in revenue over the next decade while cutting U.S. GDP by 0.9 percent. The ruling remains on hold until October 14, 2025, which gives the government time to appeal to the Supreme Court. In this piece, we'll get into the latest US tariffs news and analyze what this most important development means for international trade and presidential authority.

Federal Court Declares Trump’s IEEPA Tariffs Unlawful

The Federal Circuit Court of Appeals has dealt a major blow to the Trump administration's trade policy. Their landmark 7-4 ruling struck down controversial tariffs implemented under the International Emergency Economic Powers Act (IEEPA). This latest development marks a turning point in a legal battle that has created uncertainty across global markets.

Federal Circuit affirms lower court ruling

The Federal Circuit determined that President Trump went beyond his authority when he imposed sweeping tariffs through IEEPA. Chief Judge Moore wrote the majority opinion stating that "IEEPA contains no explicit authorization for tariffs" and emphasized that "Congress has established specific statutory frameworks for imposing tariffs" through other legislation.

The court examined the difference between economic sanctions and tariffs. While IEEPA gives the president broad powers to regulate financial transactions during emergencies, it doesn't cover implementing broad-based import duties. This view contradicts the administration's stance that national security concerns justified using emergency powers for tariffs.

Economic analysts predicted Trump's tariffs would disrupt global supply chains and raise costs for American consumers and businesses. The overturned tariffs would have increased prices on imported goods by 10-60%, varying by country of origin and product type.

Trade groups that filed amicus briefs shared similar concerns with the court's decision. The Chamber of Commerce and National Retail Federation warned about a $380 billion annual cost increase for American businesses. Several economists predicted that keeping these tariffs would reduce economic growth by 0.7-1.2% each year.

The majority opinion highlighted three key points about constitutional separation of powers:

• IEEPA does not provide statutory authority for tariffs

• Congressional intent clearly separates tariff authority from emergency powers

• Trade policy of this magnitude requires explicit legislative authorization

Decision stayed until October 14 for appeal

The court granted the administration's request for a temporary stay, despite ruling against Trump's tariffs. The tariffs will remain active until October 14, 2025, giving the Department of Justice time to prepare its Supreme Court appeal.

The judicial panel granted the stay because an immediate end to tariffs could cause "economic disruption." Businesses have already factored these tariffs into their pricing and supply chain decisions, making sudden changes potentially harmful.

Solicitor General Elizabeth Prelogar filed a notice of appeal within hours of the ruling. She stated that the administration would ask for a quick review from the Supreme Court, arguing that "the President's authority to protect national security through emergency economic measures is critical and well-established."

The four dissenting judges disagreed with the majority. They argued that IEEPA's broad language about "any transaction involving any property" could include import regulation through tariffs. Judge Chen wrote for the dissenters that "the majority's reading unnecessarily constrains presidential authority during genuine national emergencies."

Financial markets reacted quickly to this news. The S&P 500 rose 1.8% right after the announcement as investors hoped for relief from trade tensions. Bond yields dropped as market participants adjusted their inflation expectations.

Importers now face a tough choice while waiting for this legal battle to end. They must decide whether to stick with current supply chains or plan for a future without tariffs - one that might not happen if the Supreme Court overturns this decision.

What Tariffs Were Struck Down by the Court?

The court's decision affects two high-impact categories of import taxes that the Trump administration put in place earlier this year. Both taxes came from presidential emergency declarations under IEEPA. These sweeping tariffs changed the map of global trade and would have stayed the life-blood of Trump's economic policy if the court hadn't struck them down.

Reciprocal Tariffs on global imports

Trump called April 2, 2025 "Liberation Day" when his administration revealed their "reciprocal tariffs". This far-reaching policy set a basic 10% duty on imports from almost every country where the US has major trade ties. The administration's original plan went beyond this base rate. They wanted extra country-specific tariffs from 11% up to a whopping 50% on dozens of trading partners, including all 27 EU nations.

The administration quickly dropped many of these country-specific increases back to the 10% baseline after a global market crash. All the same, China started with a separate 34% rate. This jumped to 84% and then to 125% after China fought back with its own tariffs. The rate ended up back at 10% while trade talks continued.

Trump announced a new set of rates from 15% to 41% on July 31 when the reciprocal tariffs went through another change. The Tax Foundation found that these tariffs, plus other Trump-era import duties, touched nearly 70% of everything coming into the United States.

The administration defended these widespread tariffs by saying they dealt with "an unusual and extraordinary threat to the national security and economy of the United States." They pointed to "a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners' economic policies". Trump basically claimed that ongoing U.S. trade deficits created a national emergency.

Some countries got breaks or negotiated lower rates. Canada and Mexico didn't have to pay reciprocal tariffs because they had separate trafficking tariffs. They would have faced a 12% reciprocal tariff on non-USMCA qualifying goods if those trafficking tariffs went away.

Trafficking Tariffs on Canada, Mexico, and China

Before the reciprocal tariffs came along, Trump rolled out what courts called "trafficking tariffs" on February 1, 2025, targeting Canada, Mexico, and China. These included:

• 25% ad valorem duties on all Mexican products

• 25% duties on Canadian goods (10% for energy products)

• 10% duties on all Chinese-origin items, later doubled to 20%

Products from Canada and Mexico that qualified for duty-free treatment under USMCA didn't have to pay these trafficking tariffs. Canadian non-USMCA products saw their rate jump from 25% to 35%.

Trump said these measures were needed because China wasn't doing enough to curb exports of fentanyl precursor chemicals. He also claimed Mexico wasn't fighting hard enough against cartels making and shipping fentanyl into the US, while Canada needed to do more to stop fentanyl from crossing the border.

Four dissenting judges pointed out that these tariffs worked as a "bargaining chip" to get more help fighting fentanyl trafficking, with rates changing based on how well countries cooperated. Treasury Department figures show the administration collected about $107 billion in customs duties from February through July 2025.

The court's ruling leaves some Trump-era tariffs untouched. These include taxes on foreign steel, aluminum, and cars under Section 232 of the Trade Expansion Act. The Biden administration kept Trump's first-term tariffs on China under Section 301 of the Trade Act of 1974, and these stay in place too.

Why Did the Court Reject IEEPA as Legal Basis?

The Federal Circuit Court of Appeals made a landmark decision that trade experts carefully examined. The court determined that the International Emergency Economic Powers Act (IEEPA) doesn't legally authorize President Trump's sweeping tariffs. This ruling shows the basic limits of presidential trade powers and creates clear boundaries between congressional and executive authority.

IEEPA lacks explicit tariff authority

The court's decision centers on a simple textual analysis: IEEPA's statutory language doesn't contain the words "tariff," "duty," "tax," or any similar terms. The majority found this absence decisive. They determined that such an important power as taxing imports would need clear congressional authorization rather than implied authority.

The majority opinion states clearly that "IEEPA bestows significant authority on the president to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax". The court stressed that the government's view of IEEPA would give unlimited tariff authority without any restrictions.

The court also rejected the government's claim that the power to "regulate importation" naturally includes tariff authority. Judge Moore wrote for the majority and noted that the term "regulate" needs to be understood alongside other verbs in the statute like "investigate, block... direct and compel, nullify, void, prevent or prohibit." None of these terms involve monetary actions or taxation powers.

The ruling stands on two key legal principles. The court first used the Major Questions Doctrine, which needs clear congressional authorization for actions of "vast economic and political significance". The judges found that Trump's tariffs triggered this doctrine because they were:

1. "Unheralded and transformative" - No president had claimed before that IEEPA authorized such large tariffs

2. Of "vast economic and political significance" - The tariffs covered almost all goods from nearly every country and could generate between $2.3 trillion and $3.3 trillion

3. Encroaching on a core Congressional power - The Constitution gives Congress the power of taxation, including tariffs

Four concurring judges went further and said the government's interpretation would make IEEPA "an unconstitutional delegation" of power. Their concurrence noted that "the government's interpretation of IEEPA would be a functionally limitless delegation of congressional taxation authority".

Comparison with other trade statutes

The court's comparison between IEEPA and other trade statutes that clearly give tariff authority to the president damaged the government's case severely. The judges pointed out many examples where Congress has carefully given limited tariff powers.

Every congressional delegation of tariff authority has "well-defined procedural and substantive limitations", unlike the unlimited power claimed under IEEPA. The court cited these examples:

• Section 338 of the Tariff Act of 1930, which lets the president "specify and declare new or additional duties"

• Section 122 of the Trade Act of 1974, which allows a temporary import surcharge "in the form of duties" up to 15% for 150 days maximum

• Section 201 of the Trade Act of 1974, letting the president "proclaim an increase in, or the imposition of, any duty" or a "tariff-rate quota"

• Section 301 of the Trade Act, which lets the USTR "impose duties or other import restrictions," but only after specific investigative procedures

• Section 232 of the Trade Expansion Act of 1962, which lets the president "adjust the importation" of certain articles threatening national security, but needs a Secretary of Commerce finding, presidential determination within 90 days, action within 15 days, and a written statement to Congress

The court decided that Congress likely didn't intend "to depart from its past practice and grant the President unlimited authority to impose tariffs" when creating IEEPA. This reasoning destroyed the government's argument that IEEPA's general authorization to "regulate importation" secretly included unlimited tariff powers.

The dissenting judges argued that "regulate... importation" naturally includes tariffs as a traditional import control tool. They believed IEEPA's broad language about "any transaction involving any property" could reasonably include import regulation through tariffs.

This latest tariff news marks a vital constitutional check on executive power and confirms Congress's leading role in trade policy.

How the Major Questions Doctrine Shaped the Ruling

The Federal Circuit didn't just look at how to interpret the law when it rejected Trump's IEEPA tariffs. A newer legal idea called the major questions doctrine played a big role in the court's decision. This doctrine created a wall that blocks presidents from having too much power, even if IEEPA's words weren't crystal clear.

Court cites Biden v. Nebraska precedent

The court's decision leaned heavily on the Supreme Court's big 2023 ruling in Biden v. Nebraska that shot down Biden's student loan forgiveness plan. This case helped set clear limits on what presidents can do with broad legal powers.

The judges saw clear similarities between these cases. They pointed out that the government made an argument that the Supreme Court had already "expressly rejected in Biden v. Nebraska". The Supreme Court had decided that letting the Education Secretary "waive or modify" student loan laws didn't mean they could wipe out debt completely.

"The major questions doctrine limits executive agencies to only acting on issues of national significance with clear congressional approval," the court made clear. The Supreme Court first used this idea clearly in 2022 with West Virginia v. EPA about Obama's Clean Power Plan. The doctrine became even more important after it stopped Biden's student loan program.

The judges didn't buy the administration's claim that presidents often use tariffs as bargaining chips in international deals. They said that if Congress wants to give presidents power to make "decision[s] of vast economic or political significance," they need to spell it out.

Legal experts used to think this doctrine was just "a deregulatory tool wielded against agency action in such areas as climate, education, and public health". The court's use of it against Trump's tariffs shows it works both ways, limiting presidential power no matter which party is in charge.

Tariffs deemed economically and politically significant

The judges saw Trump's tariffs as big enough to trigger the major questions doctrine. They called these tariffs "transformative" because nobody had done anything like them before.

The court backed this up with some serious numbers:

• The Tax Foundation said Trump's tariffs would shrink U.S. GDP by 0.8% before other countries hit back - that's over $200 billion each year or more than $2 trillion over ten years

• The judges noted that "the economic impact of the tariffs is predicted to be many magnitudes greater than the two programs that the Supreme Court has previously held to implicate major questions"

• Biden's student loan program would have cost about $450 billion over ten years

• The eviction ban that triggered this doctrine earlier would have cost $50 billion in one year

The court made an important point in a footnote: "the economic impact of the tariffs is predicted to be many magnitudes greater than the two programs that the Supreme Court has previously held to implicate major questions". This means Trump's tariffs definitely needed this extra scrutiny.

Tim Brightbill from Wiley Rein, who knows trade law inside and out, talked about how much money was at stake. He called it an "extremely important question involving billions of dollars - potentially trillions of dollars". "Only a handful of trade law cases have gone to the Supreme Court, so it just shows the extreme importance of this issue across the U.S. economy, and really the global economy".

The court worried about more than just money. They saw danger in letting presidents bypass Congress's rules about tariffs by claiming emergency powers that had fewer restrictions. By August, tariff revenue had hit $159 billion - more than double from the previous year. These numbers convinced the court that Trump's tariffs needed clear permission from Congress.

What Did the Dissenting Judges Argue?

Four judges strongly disagreed with the majority ruling on Trump's tariffs. Judge Richard Taranto led this opposition, and Chief Judge Moore along with Judges Prost and Chen joined him. These judges came up with a completely different view of presidential authority under IEEPA.

IEEPA grants broad emergency powers

The dissenting judges challenged the majority's limited interpretation of IEEPA. Congress knew exactly what it was doing when it gave broad emergency powers in foreign affairs. Their view focused on what "regulate imports" really means.

Judge Taranto looked up dictionaries to show that "regulating" means the same as "controlling," "governing," or "directing" - exactly what tariffs do. The judges pointed out that lawmakers in the 1970s would have known about a 1974 court decision that said "regulate imports" includes setting tariffs.

The dissent disagreed with the majority's positions on both "no-tariffs" and "not-these-tariffs". Emergency power laws are different from other laws that give authority, and IEEPA gives broad powers.

The judges knew people might worry about unlimited presidential power. Courts can still check if a president has misused power or gone beyond legal limits. They mentioned the Supreme Court's recent Loper Bright Enterprises v. Raimondo decision to show that judges can make sure presidential actions stay within Congress's rules, even in foreign affairs.

Presidential discretion in foreign affairs

The dissent made a key point about presidential power in international relations. The President should have flexibility with tariffs during crises, regardless of Congress's regular tariff schedules.

Presidential emergency powers serve specific purposes:

• Quick responses to international threats

• Tools to protect national security

• Better diplomatic negotiations with foreign governments

Trump used tariffs as a negotiating tool, which the dissenting judges saw as a valid use of IEEPA authority. This view directly opposed the Circuit Court of International Trade's May decision that the majority supported.

The dissenting judges concluded that IEEPA's presidential powers are constitutional under Supreme Court decisions. These decisions have consistently supported broad authority grants, including tariff powers, in foreign affairs.

Judge Taranto specifically noted that the Trump administration chose IEEPA because it allowed quick and flexible responses. This flexibility matters when dealing with national emergencies.

This deep divide among federal judges shows how complex the constitutional questions are in this tariff battle. A Supreme Court showdown seems inevitable.

How Will the Supreme Court Respond to the Appeal?

The Supreme Court has stepped into the high-stakes legal battle over Trump's controversial tariff policies. They granted a quick review that will lead to a rapid resolution of this major economic dispute.

DOJ requests expedited review

The Department of Justice asked the Supreme Court for a faster appeal timeline right after receiving the Federal Circuit's ruling. Solicitor General D. John Sauer's filing included a stark warning. He stated that the lower court decision "has disrupted highly impactful, sensitive, ongoing diplomatic trade negotiations, and cast a pall of legal uncertainty over the President's efforts". Trump's team described the tariffs as his "most significant economic and foreign-policy initiative".

The Treasury Department made an unusual move that highlighted the economic gravity of the situation. They claimed that a delayed Supreme Court decision until June 2026 could force them to refund between $750 billion and $1 trillion in collected tariffs. U.S. Customs and Border Protection data shows tariff collections reached about $475 billion for fiscal year 2025 as of August 24. The challenged tariffs directly contributed $210 billion to this amount.

Possible outcomes and timelines

The Supreme Court acted decisively by combining multiple lawsuits—including those from small businesses and Democratic-led states. They scheduled oral arguments for the first week of November. This quick timeline shows the justices understand the serious economic implications at stake.

The case could have three possible outcomes:

1. The Court could uphold the Federal Circuit's ruling, permanently striking down the tariffs and potentially requiring refunds of collected duties

2. The justices might reverse the lower court, proving Trump's emergency powers interpretation right

3. A split decision could emerge, allowing some tariffs while rejecting others

Legal experts disagree about the timing. Regular Supreme Court cases decided in November typically see rulings by June, but this accelerated schedule points to an earlier decision. In spite of that, the Court hasn't set a firm deadline for its opinion.

Treasury Secretary Scott Bessent told Fox Business Network he feels confident the Supreme Court will support the tariffs, saying that "courts are very reluctant to overrule a president's signature policy". Oregon Attorney General Dan Rayfield sees it differently. He represents states challenging the tariffs and believes the Court will reject them. He points out that "conservative jurists" developed many key constitutional principles being applied.

The tariffs stay in effect during this period of legal uncertainty.

What Happens to Tariffs in the Meantime?

The Federal Circuit ruled against Trump's tariffs, but American businesses still face a harsh reality - these disputed import duties remain fully enforceable. This latest development creates a complex interim period for U.S. importers and their global trade partners.

Tariffs remain enforceable during appeal

The challenged tariffs are still being collected at U.S. ports of entry, which keeps the status quo for global trade relationships intact. The Federal Circuit managed to keep its decision on hold until at least October 14, 2025. This gives the government time to appeal to the Supreme Court. The Treasury Department continues to collect duties during this appeal period. These tariffs affect much of all goods coming into the United States - nearly 70%.

The Supreme Court's decision to accelerate the case stretches this enforcement period further. The justices' faster schedule still puts oral arguments in early November. The Court's typical timeline suggests a final ruling might not come until June 2026. The Treasury Department expects to collect between $750 billion and $1 trillion in duties during this extended appeal period.

Importers must continue compliance

Importers need to follow all tariff requirements whatever their final legal outcome. "Importers will continue to be required to pay these tariffs until the Supreme Court directs otherwise," noted one trade law analysis. Companies now face greater uncertainty. They must budget for these extra costs while knowing they might get refunds later.

If importers end up winning, they could receive refunds with interest. Businesses seeking possible refunds must document all IEEPA tariffs they've paid. They need to file "protests" within specific timeframes - usually within 180 days of "liquidation" (when U.S. Customs officially finalizes each entry).

Importers now navigate a complex situation. The Federal Circuit's ruling made the tariffs invalid legally but they remain enforced. One international trade publication put it clearly: "Companies cannot assume immediate tariff relief. Despite favorable court rulings, the IEEPA tariffs are still in effect under the temporary stays".

What Does This Mean for Presidential Trade Powers?

The Federal Circuit's ruling transforms the power balance between Congress and the presidency in trade matters. This change creates immediate effects on executive authority and shapes future trade policy.

Limits on executive authority under IEEPA

The court's decision sets clear limits on presidential trade powers. The Constitution grants Congress—not the president—the authority to issue taxes and tariffs. Any delegation of that authority requires explicit and limited terms. This new interpretation challenges the expanding executive trade authority seen over recent decades. Presidents must now rely on specific statutes with clear tariff authorization when imposing broad tariffs. These include Section 232 (national security) or Section 301 (unfair trade practices), which come with specific procedural requirements and limits.

Potential need for Congressional clarification

Legal uncertainty puts pressure on Congress to clarify presidential trade powers. Bipartisan proposals have emerged to address these concerns. The Trade Review Act of 2025, introduced by Senators Cantwell and Grassley, would need congressional approval within 60 days for any new presidential tariff. The Reclaim Trade Powers Act seeks to remove Section 122 of the Trade Act of 1974, which allows 15% tariffs during balance-of-payments crises. Senator Wyden's statement reinforces that "the Constitution provides Congress with sole authority 'to lay and collect duties' and 'to regulate commerce with foreign nations'".

Conclusion

The Federal Circuit's landmark decision against Trump's IEEPA tariffs marks a defining moment in the power struggle between executive authority and Congress. This ruling sets vital boundaries around presidential trade powers. It confirms that the executive branch cannot impose broad tariffs without Congress's explicit authorization, even during declared emergencies.

Global markets have shown positive signs about the possible removal of these controversial duties. However, businesses must still follow tariff requirements until the Supreme Court makes its final decision. The economic stakes are high - financial analysts predict either preventing a 0.9% GDP drop if the tariffs fall, or the administration collecting nearly $1 trillion in duties if they remain.

The Major Questions Doctrine's application across different political administrations shows how this new legal principle goes beyond party lines. It acts as a constitutional check against executive overreach. The majority made a compelling argument that taxation powers, including tariffs, stay with Congress unless specifically delegated - despite dissenting judges' valid concerns about presidential discretion in foreign affairs.

The case now moves to the Supreme Court with implications that reach far beyond economics. The justices face the task of balancing constitutional separation of powers with presidential emergency authority during national crises. Their ruling will define executive trade power boundaries for decades and might force Congress to create clearer laws about tariff authority.

American businesses face uncertainty while trading partners adjust their strategies. Yet one fact stands out - this ruling challenges the decades-long expansion of presidential trade authority. The Supreme Court's decision, whether it upholds or overturns the Federal Circuit's ruling, has already started vital discussions about limiting executive power in our complex global economy.