In a significant setback for President Donald Trump’s aggressive trade agenda, a federal appeals court has declared most of his sweeping tariff policy illegal. The Federal Court, being the U.S. Court of Appeals, on 29th August, 2025, ruled 7-to-4 that Trump exceeded limits imposed on his powers when he invoked emergency powers to impose comprehensive tariffs on almost all trading partners of the US.
The court ruling invalidated Trump’s “reciprocal tariffs” proclaimed upon what he called “Liberation Day” (April 2, 2025) as stated here, These are all the tariffs that go into effect in the U.S. on April 2 on Trump’s ‘Liberation Day’ – The most affected products and countries, in addition to his tariffs imposed on China, Canada, and Mexico due to fentanyl trafficking. These tariffs constituted about 69% of U.S. imports before the court intervened on these measures, since all were executed under IEEPA or International Emergency Economic Powers Act.
Constitutional authority in focus of law challenge
The ruling of the appeals court pertains to a core principle of the Constitution: the power regarding taxes, and tariffs are one of them, is only for the Congress and not for executive authority. The majority opinion emphasized that it must be “the core Congressional power to impose taxes such as tariffs vested exclusively in the legislative branch by the Constitution.”
The court also declined to consider expansive emergency authority granted by IEEPA to levy tariffs as an argument supporting the Trump administration because the law passed in 1977 “does not use the term ‘tariff’ or any of its synonyms, like ‘duty’ or ‘tax'”. Instead, the majority concluded: “seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs under an emergency powers act.”
Scope and timeline set by the court decision
This ruling is clearly a political victory against Trump, it is not to have immediate practical impact. The appeal court allowed tariffs to kick into effect till October 14, 2025, to allow the administration time for seeking review at the Supreme Court. Keeping such a stay ensures that while legal tussles continue, billions of import dollars keep flowing into the coffers of the government.
In short, judgment touched the most disputed areas tariffs-wise in Trump’s trading policy: baseline tariffs of 10% on almost all countries and a further “reciprocal” duty amounting to 50% for dozens of trading partners. But it does not affect tariffs born under different legal authorities, such as national security provisions that cover steel, aluminum, and automobile imports.
Economic stakes and business uncertainties
There are huge economic effects from the legal fight; Trump asserts that his tariffs have caused above $15 trillion to be invested in the U.S. New analysis, however, found no evidence of the supposed figure. Long run GDP loss is expected to be about 6%; long run wage loss is expected to be about 5%, from Penn Wharton Budget Model, with a middle-income household facing $22,000 lifetime losses.
Such uncertainties in tariffs have been proved harmful to American businesses large and small, for the latter comprise the 97% of U.S. importers. Over two-thirds of small businesses now name economic insecurity as their number one challenge, according to reports by the National Small Business Association. The on-again, off-again nature that has characterized Trump’s tariff policies has forced businesses under hard decisions: hiring or not, inventory management, capital allocation, and even long-term investments.
Defiant response by the administration
In defiance, Trump along with the administration would reportedly face the court ruling. On his Truth Social platform, the president described the ruling as “highly partisan” and promised a final resort to the Supreme Court, declaring that, “if allowed to stand, this Decision would literally destroy the United States of America.”
White House trade advisor insisted on raising the stakes asserting that a Supreme Court strike down of the tariffs would mean; “the end of the United States.” Commerce Secretary Howard Lutnick also laid it down that a ruling against Trump’s tariffs may cause “irreparable damage” to all current trade agreements with the European Union, United Kingdom, and Japan.
Path to Supreme Court showdown
Public sentiment from legal experts is that the Supreme Court considers to take up this case due to the essential points involved in the separation of powers and the presidential authority over trade policy. If indeed this timeline of the Federal Circuit is held, one possibility still remains that the Supreme Court will add this case to its docket of 2025-26 term, beginning on October 6.
At the Supreme Court level, the result could transform the power balance between Congress and the presidency regarding matters of international trade. An adverse ruling against Trump would then invalidate billions in tariff revenues and set important precedents on limitations of executive stature in such economic emergencies.
