A federal appeals court ruled on Friday that most of President Donald Trump’s tariffs are illegal, but allowed them to remain in place until October 14 to give the administration time to appeal to the Supreme Court.
The U.S. Court of Appeals for the Federal Circuit decided in a 7-4 vote that Trump overstepped his authority when using the International Emergency Economic Powers Act (IEEPA) to impose widespread tariffs.
“The statute 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 stated in its ruling.
The decision affects two major sets of tariffs: the April “Liberation Day” package, tied to trade deficits, with a 10% baseline on most imports and higher “reciprocal” rates up to 50%, and separate February tariffs on China, Canada, and Mexico tied to fentanyl and immigration.
Importantly, other tariff programs remain untouched. The ruling does not impact tariffs issued under different legal authorities, such as Section 232 steel and aluminum tariffs and earlier Section 301 China tariffs from Trump’s first term.
Trump quickly responded on his social media platform Truth Social, declaring “ALL TARIFFS ARE STILL IN EFFECT!” He added that removing the tariffs would “literally destroy the United States of America” and indicated he would take the fight to the Supreme Court.
The case combined two legal challenges: one from five small U.S. businesses and another from 12 Democratic-led states. Both argued that IEEPA does not authorize the president to impose sweeping tariffs.
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Jeffrey Schwab of the Liberty Justice Center, which represented the small business plaintiffs, praised the decision: “For the second time in this case, a federal court has held that the President’s so-called ‘Liberation Day’ tariffs are unlawful.”
The ruling centers on a key legal question: whether IEEPA, which allows presidents to address “unusual and extraordinary” threats during national emergencies, grants authority to impose tariffs. The court determined Congress never gave the president such broad powers through this law.
“It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs,” the court explained.
The tariffs have become a cornerstone of Trump’s economic policy, used to pressure trading partners and renegotiate trade deals. By July 2025, tariff revenue had reached approximately $159 billion, more than double the amount collected at the same point last year.
If the tariffs are ultimately struck down, U.S. importers might be entitled to refunds of duties already paid, creating potential fiscal challenges for the government. The Justice Department warned in legal filings that eliminating the levies could lead to “financial ruin” for the United States.
Even if the Supreme Court upholds the appeals court decision, Trump has other legal pathways to impose tariffs. The administration could use Section 301 of the 1974 U.S. Trade Act, Section 232 of the 1962 trade law (already used for steel and aluminum duties), or negotiate formal trade agreements.
For now, businesses and consumers won’t see immediate changes, as the tariffs remain in place under a stay through October 14 to allow a possible Supreme Court appeal. After that date, the case will return to the lower court to address injunction scope unless a further stay is granted.
The ruling creates uncertainty for recent trade negotiations with partners like the EU, UK, and Japan, where deals were framed around averting higher reciprocal tariffs.
