The Federal Appeals Court ruled that most of Donald Trump’s tariffs exceed his powers as president.
The so-called reciprocal tariffs imposed on almost all countries that trade with the US are illegal, the US Appeals Court ruled on Friday.
The ruling upholds a May decision by the International Trade Court, which also rejected Trump’s argument that his global tariffs were permitted under the International Emergency Economic Powers Act.
The court did not strike down the tariffs, but said they would remain in effect until mid-October, setting the stage for further legal action in the US Supreme Court.
Much remains unknown, but here is what we understand at this point about the court’s decision and what it could mean for the US president’s flagship policy.
In its 7-4 decision, the appeals court upheld the lower court’s conclusion that President Trump did not have the authority to impose global tariffs.
This was mainly because of the law Trump used to justify his policy, the International Emergency Economic Powers Act (IEEPA), which, according to the judges, does not give “the power to impose tariffs, duties, etc., or the power to levy taxes.”
The US Court of Appeals rejected Trump’s argument that the tariffs were permitted under his emergency economic powers, calling the levies “invalid because they violate the law.”
Trump immediately rejected the ruling, writing on Truth Social hours after it was handed down that the appeals court was “very biased” and that the ruling was a ‘disaster’ for the country.
“If this ruling stands, it will literally destroy the United States of America,” he wrote.
This law, passed decades ago and repeatedly invoked by Trump during both of his terms in office, gives the US president significant powers to respond to emergencies within the country or serious threats from abroad.
The 1977 law states that the president may use a range of economic levers “to counter any unusual and extraordinary threat that originates wholly or in substantial part outside the United States and is directed against the national security, foreign policy, or economy.”
It was used by both President Barack Obama and Joe Biden, who invoked the law to impose sanctions against Russia after its illegal annexation of Crimea in 2014, and then again after its full-scale invasion of Ukraine eight years later.
However, the appeals court said in its ruling that the emergency law “does not grant the president broad authority to impose tariffs.”
The IEEPA “does not mention tariffs (or any synonyms thereof) and does not contain procedural safeguards that would clearly limit the president’s authority to impose tariffs,” they said.
Trump, in announcing the imposition of global tariffs, argued that trade imbalances were damaging US national security and therefore constituted a national emergency.
However, the court ruled that imposing tariffs is not within the president’s authority and that “the power to dispose of public funds (including the power to levy taxes) belongs to Congress.”
In addition to being a significant blow to the central point of President Trump’s agenda — tariffs — the federal appeals court’s decision could have a direct impact on the US economy and cause a chain reaction in global markets.
“Businesses will be subject to uncertainty,” said Dr. Linda Yue, an economist at Oxford University and London Business School, on BBC Today.
While countries wait to see if the Supreme Court will take up the case, which seems likely, they may decide to suspend business with the US.
If that happens, Dr. Yue said, it could “weaken economic activity.”
There are also significant implications that could play out in the political arena.
For example, if the Supreme Court overturns the federal appeals court’s decision and sides with the Trump administration, it could set a precedent that encourages the president to use the IEEPA more aggressively than he has done so far.
The case will likely be referred to the highest court in the US, as Trump announced on Truth Social.
“Our indifferent and short-sighted politicians have allowed tariffs to be used against us,” Trump wrote. “Now, with the help of the US Supreme Court, we will use them for the benefit of our nation and make America rich, strong, and powerful again!”
The conservative majority in the US Supreme Court could potentially increase the likelihood that it will support the president’s position.
Six of the nine justices were appointed by Republican presidents, including three by Trump during his first term in the White House.
However, the court is also more critical of presidents when it believes they exceed their authority on issues not approved by Congress.
For example, during Joe Biden’s presidency, the court expanded what it called the “major question doctrine” to invalidate Democrats’ attempts to use existing laws to limit greenhouse gas emissions from power plants and forgive the student loan debt of millions of Americans.
The federal appeals court split 7-4 in its ruling that nearly all of Trump’s tariffs are illegal. It has now given the US administration until mid-October to appeal to the US Supreme Court in a case that has implications for both the US economy and its trade relations with the rest of the world.
If the Supreme Court upholds the ruling, it could cause uncertainty in financial markets.
Questions will arise about whether the US will have to return the billions of dollars it has collected in import duties on products from countries that have paid them over the past few months.
It could also call into question whether major economies, including the UK, Japan, and South Korea, will be bound by the individual trade deals they have negotiated with the US before the August deadline. Other trade deals currently under negotiation could also be thrown into chaos.
If the appeals court ruling is upheld, it will also deal a huge blow to Trump’s political authority and his reputation as a negotiator. But if it is overturned by the Supreme Court, it will have the opposite effect.
This decision concerns Trump’s “reciprocal tariffs,” which include a set of different rates for most countries in the world, including other taxes imposed on China, Mexico, and Canada.
These import duties on almost all goods from almost all countries with which the US trades will remain in effect until mid-October.
After October 14, they will no longer be in effect, the appeals court said.
Separately, tariffs on steel, aluminum, and copper, which were imposed under other presidential powers, will remain in effect and will not be affected by the court’s decision.
Canadian Prime Minister Mark Trudeau announced on Friday that the Canadian authorities are waiving a number of tariffs imposed in response to US tariffs on some US imports, according to The Globe and Mail.
“In accordance with our commitments under the United States-Mexico-Canada Agreement (USMCA), I am announcing today that the Canadian government will take measures similar to those taken earlier by the US and will remove tariffs on all US goods covered by the agreement,” the prime minister said.
However, Carnie clarified that Canada will maintain tariffs on US imports of steel, aluminum, and automobiles, and Ottawa will work intensively with Washington on this issue. Carney noted that following his conversation with US President Donald Trump this week, the two sides will engage in more active discussions on “challenges in strategic sectors” and on increasing cooperation in trade, investment, and security.
Carney also believes that Canada is making progress in trade negotiations with the US. “Canada currently has the best trade agreement with the US, and although it is different from what it was before, it is still better than any other country’s,” the prime minister said.
On August 1, Trump signed an executive order raising tariffs on Canada from 25% to 35%. The statement emphasized that goods covered by the preferential tariff regime under the USMCA remain exempt from the new tariffs.
In turn, The Globe and Mail reminds us that Ottawa is seeking an agreement that would reduce or eliminate tariffs on a number of Canadian goods. In July, Carnie acknowledged that Canada would probably not be able to convince Trump to cancel all tariffs.
At the same time, Canada implemented three rounds of retaliatory measures against the US. In the first round, it imposed 25% tariffs on US products worth $30 billion, including motorcycles and orange juice. The second round included 25% tariffs on another $30 billion worth of products, including metal products and consumer goods. The third round included 25% tariffs on cars, except for companies that have production facilities in Canada.
However, the publication notes that Canada subsequently softened the impact of the tariffs by approving certain exemptions, including for US-produced raw materials and components used in Canadian manufacturing.
US President Donald Trump has signed an executive order raising tariffs on imports from Canada from 25% to 35% as part of efforts to combat the flow of illegal drugs across the northern border. The new tariffs will take effect on August 1, 2025, according to the White House’s official website.
According to the administration, the decision was made against the backdrop of “Canada’s persistent failure to arrest drug traffickers, seize illegal drugs, or coordinate with U.S. law enforcement agencies.”
“The president’s further actions are necessary and appropriate to protect the lives of Americans, as well as the national security and foreign policy of the United States of America,” the statement said.
The White House recalled that Trump declared a state of emergency under the International Emergency Economic Powers Act (IEEPA) in response to the crisis caused by fentanyl and other illegal drugs.
The preferential treatment for goods covered by the US-Mexico-Canada Agreement (USMCA) remains in place. At the same time, goods that are transshipped to avoid the new tariff will be subject to a separate 40% transshipment duty.
It is noted that in this fiscal year alone, more fentanyl has been seized at the northern border of the United States than in the previous three years combined.
U.S. President Donald Trump said he may allow individual exceptions to the 10% tariff for most trading partners, although he considers the rate the minimum for countries seeking to negotiate with Washington, Bloomberg reported Saturday.
“There may be some exceptions for obvious reasons, but I would say 10% is the minimum,” Trump told reporters Friday aboard Air Force One en route to Florida. He did not specify what the reasons were, nor did he announce any new fare changes.
The announcement came after fare increases for dozens of countries announced in the week. Some were later postponed due to negative market reactions. China was hit with duties of 145%, while a prime rate of 10% has so far been applied to most nations.
“Despite this, the average duty rate in the U.S. could reach historic highs. Beijing, in response to Washington’s actions, raised tariffs on US goods to 125%. China said it will not respond to further steps, but is preparing other measures,” the report said.
Trump said at the same time that “the market is stable” and the dollar will remain “the currency of choice”. He also expressed confidence that the trade standoff with China could end positively.
The Cabinet of Ministers of Ukraine has set from June 1, 2024 the electricity tariff for the population at the rate of 4.32 UAH/kWh with VAT, which is 64% higher than the current tariff of 2.64 UAH/kWh with VAT.
This was announced by the first deputy head of the energy Committee of the Verkhovna Rada Oleksiy Kucherenko.
“4.32 is a single price. For electric heating – up to 2000 kWh at the old price in the heating period, in the summer as for everyone,” he wrote in his Facebook on Friday.
The tariff on the transit of oil through the territory of Ukraine to Hungary and Slovakia will increase by 18.3% from 1 January 2023 – from EUR11.5 to EUR13.6 per ton, a source in the government told the news agency Interfax-Ukraine.
The information is also confirmed by the Russian media with reference to the data on the website of the Russian Transneft.
In November, Bloomberg reported citing a letter from Ukrtransnafta to Transneft that the Ukrainian side notified the Russian side of the need to increase the tariff by 18% due to the ongoing destruction of the Ukrainian energy infrastructure, which led to a significant shortage of electricity, increasing its cost, a shortage of fuel and spare parts.
In addition, the costs of organizing safe working conditions for personnel and security of the Ukrainian oil transport operator’s facilities have increased.
As earlier reported, the tariff for transit of oil through the Ukraine for Transneft was increased from January 1, 2022 from EUR8.6/ton to EUR9/ton, from April 1, 2022 to EUR11.5/ton.
“Ukrtransnafta in 2021 reduced the transit of oil through the territory of Ukraine by pipeline transport to European countries and Belarus by 3.2% (427.2 thousand tons) compared with 2020 – to 12 million 724.8 thousand tons. In particular, the transit towards Budkovce (Slovakia) amounted to 8 million 594.3 thousand tons (+1.6% compared to 2020), 3 million 411.5 thousand tons (-10.6%) – Feneshlitke (Hungary), 719 thousand tons (-18.2%) – Mozyr (Belarus).
December 5, 2022 the EU and Great Britain imposed an embargo on the purchase of Russian oil, as well as participation of their companies in the transportation of Russian oil by sea and the provision of relevant services. Hungary, the Czech Republic and Slovakia managed to obtain an exception to the embargo on Russian oil from the EU.
