The US Court of Appeals for the Federal Circuit ruled on Friday, August 29, that the global tariffs President Donald Trump imposed under the rationale of national emergency were illegal. A full en banc hearing before 11 judges (the twelfth did not participate) ruled that “grant of presidential authority to ‘regulate’ imports does not authorize the tariffs imposed by the Executive Orders.”
The Ruling
The 7-to-4 127-page decision addressed five executive orders in which the plaintiffs — five private companies and a dozen states — challenged Trump’s legal right to impose the tariffs in a lawsuit brought before the Court of International Trade, or CIT. The President had invoked a 1977 law called the International Emergency Economic Powers Act, or IEEPA.
The Court of Appeals said that after the declaration of a national emergency, the IEEPA says the President could “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any . . . importation or exportation of . . . any property in which any foreign country or a national thereof has any interest.”
There are multiple other laws under which a president can impose or modify tariffs under “certain circumstances.” The judges found that the challenged executive orders were not authorized by the IEEPA. The court noted that the law doesn’t use such words as tariffs, duties, customs, taxes, or other words in contrast with other statutes where Congress “affirmatively granted such power and included clear limits on that power.”
The tariffs, promised by Trump, who used them against China during his first term, began on the so-called “Liberation Day” on April 2, 2025. Following that was a dizzying parade of additional tariffs, delays in implementation, claimed deals with other countries and regions (some of which disputed the details the White House proclaimed).
The CIT found for the plaintiffs, at which point the White House appealed the decision. Now a solid majority of the Court of Appeals has upheld the decision. It is sending the case back down to the CIT to determine whether the ruling affected just the plaintiffs or everyone affected by the tariffs.
The Administration Panics
As the Wall Street Journal reported, Trump administration lawyers sent a letter to the appeals court in advance of the hearing that warned of “catastrophic consequences” with already reached agreements.
“Our country would not be able to pay back the trillions of dollars that other countries have already committed to pay, which could lead to financial ruin,” they wrote. “The President believes that a forced dissolution of the agreements could lead to a 1929-style result,” meaning an economic crash like that of the Great Depression.
This comment makes little sense. U.S. importers pay tariffs, not other countries, and, in turn, they pass on some or all of the costs to their customers, whether consumers or businesses. Tariffs are taxes. The only way other countries “pay” is if their exporters cut their margins and charge less for goods, so the imported products have lower tariffs due.
There have been talks of other countries investing in the U.S., but many already did that, cutting back because of the uncertainty the structure and execution of tariffs brought. And announcements of investment agreements have already proven questionable.
When the White House mentioned the details of the EU trade deal, Jorge Liboreiro, a reporter at Euronews, posted an analysis on the White House’s fact-sheet about the US-EU trade deal that, as he notes, “with claims that directly contradict the European Commission’s version of events.”
One example is that the White House touted a $600 billion U.S. investment “pledge” that the EU clarified as an “intention,” not a pledge. There was no deal on EU purchase of U.S. military equipment. There was no concession on food safety and sanitary certificates for U.S. pork and dairy products.
If anything, the confused and unpredictable tariff strategies have laid the groundwork for a potential recession and a “Hail Mary” play that is likely not to do what was economically necessary, as avoiding the tax and spend package that dug the U.S. national debt pit even deeper than it was.
It seems almost certain that the administration will push for a Supreme Court hearing, probably an emergency one, while the CIT reconsideration continues.