Washington> President Donald Trump boldly claimed he had nearly unlimited power to avoid Congress and impose large taxes on foreign goods. Now a federal appeals court has stopped him. The US Court of Appeals for the Federal Circuit ruled on Friday that Trump went too far when he called a national emergency to justify putting big import taxes on almost every country. The ruling mostly supported a May decision from a trade court in New York. But the 7-4 court decision removed part of that ruling, which said the tariffs should be canceled right away. This gives Trump’s team time to take the case to the US Supreme Court.
The ruling was a big blow for Trump, whose unpredictable trade policies have shaken financial markets, caused confusion for businesses, and created fears of higher prices and slower economic growth. The court’s decision is focused on the tariffs Trump introduced in April on almost all US trading partners, and the ones he had placed earlier on China, Mexico, and Canada. On April 2, which he called “Liberation Day,” Trump announced tariffs of up to 50% on countries with whom the US has a trade deficit and 10% tariffs on almost everyone else.Later, Trump paused the higher tariffs for 90 days to let countries talk to the US and lower barriers for American goods. Some countries did, like the UK, Japan, and the EU, and they made unfair deals with Trump to avoid bigger tariffs. Countries that refused or upset Trump faced higher tariffs earlier this month. For example, Laos got hit with a 40% tax and Algeria with a 30% levy. Trump also kept the base tariffs in place.
Trump claimed he had special power to act without Congress, using the 1977 International Emergency Economic Powers Act to justify the taxes. He said the US trade deficits were a national emergency. In February, he used the same law to put tariffs on Canada, Mexico, and China, saying the flow of illegal immigrants and drugs across the border was a national emergency and that these countries needed to do more to stop it.The US Constitution gives Congress the power to set taxes, including tariffs. But over time, lawmakers have given more power to presidents, and Trump has used that to his advantage. The court’s challenge doesn’t apply to other Trump tariffs, like the ones on foreign steel, aluminum, and cars, which he imposed after investigations by the Commerce Department claimed those imports were a threat to national security.
It also doesn’t cover the tariffs Trump put on China during his first term, which Biden kept. After a government study found China used unfair practices to help its tech companies, the US government had argued that courts had approved President Nixon’s use of emergency tariffs during economic chaos. The Nixon administration used the 1917 Trading With Enemy Act, which was later used as a basis for the 1977 law.In May, a trade court in New York rejected Trump’s argument, ruling that his April tariffs went beyond what the emergency law allowed. The court combined two cases — one from five businesses and one from 12 US states — into one. The appeals court wrote in its 7-4 decision that “it seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs.” A dissenting opinion from the judges who disagreed leaves a possible legal path for Trump, claiming that the 1977 law is not an unconstitutional transfer of legislative power, as some Supreme Court decisions have allowed Congress to give some tariff powers to the president.
The government says that if Trump’s tariffs are canceled, the US might have to give back some of the taxes it collected, which could hurt the US Treasury. Tariff revenue reached $159 billion by July, more than double the amount collected at that time the previous year. The Justice Department warned that canceling the tariffs could lead to “financial ruin” for the country and could make it harder for Trump to impose tariffs in the future.
Ashley Akers, a law firm expert and former Justice Department lawyer, said before the appeals court decision that while trade deals might stay in place, the administration could lose a key tool in its negotiations, which might make foreign governments less willing to agree to future demands or delay agreements. Trump promised to fight the decision in the Supreme Court. “If allowed to stand, this decision would literally destroy the United States of America,” he wrote on his social media.Trump still has other laws to use for import taxes, but they would limit how quickly and strongly he can act. For example, the trade court mentioned that Trump has more limited power under the Trade Act of 1974 to put tariffs on trade deficits, with tariffs capped at 15% and limited to 150 days for countries with major trade deficits. The administration could also use Section 232 of the Trade Expansion Act of 1962, as it did with steel, aluminum, and cars, but that requires a Commerce Department investigation and can’t be used quickly.
