US appeals court holds most Trump tariffs illegal. What happens next?

The 7-4 decision from the US Court of Appeals for the Federal Circuit in Washington, DC, addressed the legality of what Trump calls “reciprocal” tariffs imposed as part of his trade war in April, as well as a separate set of tariffs imposed in February against China, Canada and Mexico.

The appeals court ruling stems from two cases — one brought by five small US businesses and the other by 12 Democratic-led US states, which argued that International Emergency Economic Powers Act (IEEPA) does not authorise tariffs.

Trump’s ‘unlimited authority’: What did the court say

The US court reacted to Trump’s justification of both sets of tariffs—as well as more recent levies—under the International Emergency Economic Powers Act (IEEPA).

IEEPA gives the president the power to address “unusual and extraordinary” threats during national emergencies. Moreover, the Constitution grants Congress, not the president, the authority to issue taxes and tariffs, and any delegation of that authority must be both explicit and limited, according to the lawsuits.

As per Reuters, the court said, “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.”

“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 added.

Trumla justifies tariffs

Trump, the first US president to invoke IEEPA to impose tariffs, said the measures were justified given trade imbalances, declining US manufacturing power and the cross-border flow of drugs.

The US Department of Justice argued that the law allows tariffs under emergency provisions that authorise a president to “regulate” imports or block them completely.

Trump declared a national emergency in April over the fact that the US imports more than it exports, as the nation has done for decades. 

Trump said the persistent trade deficit was undermining US manufacturing capability and military readiness.

The US President added that the February tariffs against China, Canada and Mexico were appropriate because those countries were not doing enough to stop illegal fentanyl from crossing US borders — an assertion the countries have denied.