A federal appeals court has ruled that Donald Trump’s sweeping “reciprocal” tariffs are illegal, a decision that could lead to the repayment of billions of dollars to U.S. importers and dismantle a central pillar of his economic agenda. The court found the former president misused a law meant for national security crises.
The judgment focused on the use of the 1977 International Emergency Economic Powers Act (IEEPA) to justify tariffs on countries based on trade imbalances. The court’s majority opinion stated that the act’s authority to “regulate” imports does not extend to imposing tariffs, a power historically reserved for Congress. This move was described as an overstep of presidential authority.
This ruling differentiates these IEEPA-based tariffs from those on specific goods like steel and aluminum, which were imposed under a separate law, Section 232 of the Trade Expansion Act, and are not affected by this decision. The court found Trump’s justification—that trade deficits constitute a national emergency—was not what lawmakers envisioned when drafting the IEEPA.
The case is now expected to head to the Supreme Court following Trump’s vow to appeal. In the meantime, the ruling casts doubt on the durability of informal trade deals made to mitigate these tariffs and shifts the legal landscape for future presidents seeking to use emergency powers for economic purposes. The lower court has been tasked with exploring the massive logistical challenge of potential tariff refunds.