Federal Court Rejects Trump Tariffs, Upholding Congress’ Authority; Administration Appeals to Supreme Court

A recent federal appellate court ruling has significantly challenged the current administration’s trade policy, specifically invalidating a broad application of tariffs initiated under President Donald Trump. This decision by the Federal Circuit Court of Appeals underscores a reassertion of Congressional authority over trade policy, potentially reshaping the landscape for U.S. importers and international trade relations, with substantial economic ramifications if upheld by the Supreme Court.

• The Federal Circuit Court, in a divided 7-4 decision, ruled against the broad application of tariffs under the International Emergency Economic Powers Act (IEEPA).
• The court emphasized that the constitutional power to levy taxes, including tariffs, rests solely with the legislative branch.
• The White House has confirmed its intent to appeal the decision to the Supreme Court.
• President Trump publicly expressed strong disapproval, labeling the appellate court “Highly Partisan,” and conveyed confidence in a Supreme Court reversal.
• This ruling marks the second consecutive legal defeat for the Trump administration in the consolidated V.O.S. Selections v. Trump lawsuit.
• Previously, the U.S. Court of International Trade had also rejected the administration’s interpretation of IEEPA in May, nullifying various tariffs.

The Federal Circuit’s Landmark Ruling

The Federal Circuit Court, in a divided 7-4 decision, ruled that the International Emergency Economic Powers Act (IEEPA), the statutory basis invoked for the administration’s expansive tariffs, did not grant the President such broad authority. The court emphasized that the power to levy taxes, including tariffs, is constitutionally vested solely in the legislative branch. This ruling creates a critical precedent regarding the separation of powers in trade matters. The court has, however, suspended the effectiveness of its resolution until October 14, providing the Trump administration a window to seek a reversal from the Supreme Court.

Administration’s Response and Ongoing Legal Battle

In response to the judgment, the White House confirmed its intent to appeal the decision to the Supreme Court. A spokesperson for the White House, Kush Desai, stated, “The President maintains his tariffs in effect, and we anticipate a definitive victory on this matter.” President Trump also publicly expressed strong disapproval of the appellate court, labeling it as “Highly Partisan,” and conveyed confidence that the Supreme Court would rule in his favor, asserting that the removal of these tariffs would be detrimental to the nation.

This decision marks the second consecutive legal defeat for the Trump administration in the critical case known as V.O.S. Selections v. Trump. This consolidated lawsuit stems from challenges brought by several states and multiple small U.S. businesses. The case has progressed further than numerous other federal lawsuits questioning the administration’s use of the IEEPA for imposing widespread tariffs. The administration had argued that the IEEPA grants the President the power to impose specific tariffs at any level deemed necessary to address a national emergency.

Previously, the U.S. Court of International Trade rejected this interpretation in May, nullifying IEEPA-based tariffs, including “reciprocal” tariffs imposed globally. This earlier ruling also rescinded tariffs placed on imports from Canada, Mexico, and China, which had been justified by the administration as a measure against alleged fentanyl trafficking into the U.S. While that decision was swiftly suspended pending appeal, oral arguments in July revealed significant skepticism among judges regarding the administration’s legal arguments.

Scope and Implications of the Decision

The core of the Federal Circuit’s Friday resolution concluded that the challenged tariffs exceeded the President’s authority under the IEEPA. The court found that these tariffs, both those related to “trafficking” and “reciprocal” tariffs, “lack limits in scope, amount, and duration.” It further noted that these tariffs applied to nearly all imported goods (and, in the case of reciprocal tariffs, to most countries), imposed high and fluctuating rates exceeding established U.S. tariff schedules, and were not time-limited. This ruling sets a crucial legal boundary for presidential discretion in trade policy and underscores the constitutional division of powers between the executive and legislative branches concerning economic measures.