August 30, 2025

US President Donald Trump boldly claimed he had near-unlimited power to bypass Congress and put heavy taxes on foreign goods. But now, a big US court has hit the brakes on his daring move! The US Court of Appeals for the Federal Circuit ruled on Friday that Trump went too far when he used national emergencies to impose sweeping import taxes on almost every country worldwide. This decision mostly supported a May ruling by a special federal trade court in New York. However, the appeals court didn't completely cancel the tariffs right away. It gave Trump’s team some breathing room to appeal the case to the US Supreme Court. This is a major setback for Trump. His wild trade moves have shaken financial markets, confused businesses, and scared people about higher prices and slower economic growth. So, which tariffs did the court knock down? The focus was on tariffs from April that hit almost all US trade partners. Trump called April 2 "Liberation Day" and imposed heavy "reciprocal tariffs"—up to 50%—on countries where the US had a trade deficit and set a 10% tariff on almost everyone else. Later, he paused the highest tariffs for 90 days to push countries to cut their trade barriers against American goods. Some, like the UK, Japan, and the European Union, agreed to deals with Trump to dodge even bigger taxes. But countries that resisted felt the heat: Laos got a 40% tariff, Algeria 30%, and baseline tariffs stayed on the books. Trump claimed his power from the 1977 International Emergency Economic Powers Act, calling US trade deficits a "national emergency." Earlier, in February, he used the same law to put tariffs on Canada, Mexico, and China, saying illegal immigration and drug flows were national emergencies needing urgent action. The US Constitution says only Congress can set taxes, including tariffs. But over time, presidents got more power over tariffs — and Trump is using it like never before. The court case didn’t include Trump’s other tariff moves, like those on foreign steel, aluminum, and autos, which were based on national security concerns. Nor did it affect tariffs on China from Trump’s first term, which President Joe Biden kept because of unfair trade practices. Why did the court say no to Trump? His team tried to link his tariffs to President Nixon's emergency tariffs in the 1970s after ending the gold-dollar link. Nixon used the 1917 Trading With Enemy Act for that. But in May, the New York trade court said Trump’s "Liberation Day" tariffs "exceed any authority granted to the President" under emergency powers. On Friday, the appeals court said, "it seems unlikely that Congress intended to ... grant the President unlimited authority to impose tariffs." Four judges disagreed, saying the law is not an illegal handover of Congress’s power to the president. What’s next for Trump’s trade plans? If his tariffs get fully canceled, the government might have to pay back some $159 billion of import taxes collected by July — a big financial hit! The Justice Department warned losing the tariffs could lead to "financial ruin" for the US Treasury. Also, without these tariffs, Trump’s bargaining power in trade talks may weaken, letting other countries push back or delay deals. Before the ruling, trade expert Ashley Akers said, "The administration could lose a pillar of its negotiating strategy, which may embolden foreign governments to resist future demands..." Trump vowed to fight on at the Supreme Court. He wrote on social media, "If allowed to stand, this decision would literally destroy the United States of America." Trump still has other laws to impose tariffs but with limits. For example, the Trade Act of 1974 lets him set tariffs only up to 15% for 150 days on countries with big trade deficits. And Section 232 of the Trade Expansion Act of 1962, used for steel and auto tariffs, needs Commerce Department investigations and can't be used on a whim. So, Trump’s big tariff fireworks face a tough legal road ahead, and the world watches closely as this trade drama unfolds.

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Tags: Donald trump, Tariffs, Trade war, Us court of appeals, Import taxes, Trade deficit,