What’s Next for Donald Trump After US Court Declares His Global Tariffs “Illegal”?
What’s Next for Donald Trump After US Court Declares His Global Tariffs “Illegal”? The former US President has been dealt a serious legal blow after a federal appeals court ruled he overstepped his authority by imposing sweeping tariffs on nearly every US trading partner. While the tariffs will remain in place temporarily, the ruling sets the stage for a possible battle in the US Supreme Court that could reshape America’s trade policy.
The US Court of Appeals for the Federal Circuit issued its decision on Friday, agreeing with an earlier ruling from a New York trade court that Trump’s so-called “Liberation Day” tariffs went beyond the powers granted to him under US law.
The court said that Trump’s reliance on emergency powers under the International Emergency Economic Powers Act (IEEPA) was legally unsound, marking a sharp rebuke to one of his most aggressive trade strategies.
Full Reuters report available here.
The Scope of Trump’s Tariffs
At the center of the case are tariffs announced in April, when Trump declared April 2nd as “Liberation Day.” On that day, he introduced a two-tiered tariff system:
- Up to 50% tariffs on countries where the US runs a trade deficit.
- 10% tariffs on most other nations.
These measures affected nearly every US trading partner. Some countries, including the United Kingdom, Japan, and the European Union, signed new agreements with Washington under pressure to avoid harsher tariffs. Others were penalized for resisting. For example, Laos was hit with a 40% duty, while Algeria faced 30% tariffs earlier this month.
The decision also called into question Trump’s earlier tariffs on China, Mexico, and Canada, which he justified under the same emergency powers.
Trump’s Justification for Emergency Powers
Trump argued that America’s decades-long trade deficit constituted a “national emergency”, granting him authority to act without congressional approval.
In February, he went further, tying tariffs to immigration and drug smuggling concerns. He accused Mexico, Canada, and China of failing to curb illegal flows into the United States, and used those claims as justification to impose new trade restrictions.
Trump’s approach has drawn sharp criticism from economists, who say his unpredictable trade policies have rattled global markets, created uncertainty for businesses, and raised fears of higher prices and slower growth.
Why the Court Rejected Trump’s Approach
The administration argued that past presidents, including Richard Nixon in the 1970s, had used similar emergency powers to impose tariffs. But the appeals court dismissed that claim, pointing out that Nixon acted under a different law — the Trading with the Enemy Act of 1917 — not the IEEPA that Trump relied on.
Back in May, the US Court of International Trade in New York also rejected Trump’s arguments. That case consolidated two lawsuits: one brought by a coalition of US companies and another filed by 12 state governments. Both claimed Trump’s tariffs were unconstitutional and harmful to businesses and consumers.
In its 7–4 ruling on Friday, the appeals court wrote:
“It seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs.”
Still, the dissenting opinion from four judges supported Trump, suggesting that the 1977 law does not violate the Constitution and could allow for broad presidential powers in emergencies. That split now provides Trump with a viable path to appeal to the Supreme Court.
Billions of Dollars at Stake
The economic implications are significant. By July 2025, revenue from tariffs had reached $159 billion, more than double the amount collected during the same period in 2024.
If the tariffs are ultimately struck down, the US government could be forced to refund a large portion of that revenue to importers. The Justice Department has already warned that such a move could cause “financial ruin” for the federal budget, leaving a massive hole in government finances.
Trade experts also warn that a reversal could weaken Washington’s leverage in negotiations. Without the threat of tariffs, foreign governments might delay commitments, push for renegotiations, or resist US demands more aggressively.
Trump’s Next Moves
Unsurprisingly, Trump vowed to keep fighting. On his social media platform, he wrote:
“If allowed to stand, this decision would literally destroy the United States of America.”
Legal experts believe Trump’s team has already prepared alternative strategies. While the IEEPA ruling limits his powers, other laws still give the president narrower tariff authority:
- Under the Trade Act of 1974, the president can impose tariffs of up to 15% for a maximum of 150 days against countries with large trade deficits.
- The Trade Expansion Act of 1962 (Section 232) allows tariffs on national security grounds, but only after an investigation by the Commerce Department.
According to William Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, the administration has been anticipating this decision for months:
“It’s common knowledge the administration has been preparing a Plan B, presumably to keep the tariffs in place under other statutes.”
Global and Political Impact
The ruling comes at a politically sensitive time. Trump has built much of his political brand on a hardline “America First” economic agenda, portraying tariffs as a way to force trading partners to accept more favorable deals.
The decision not only complicates his trade strategy but also raises questions about how far a US president can go in bypassing Congress on economic policy. For America’s trading partners, the uncertainty remains: while the tariffs technically still stand, their legal foundation has been badly shaken.
Many governments are now watching closely to see if the case heads to the Supreme Court, a move that could either cement Trump’s trade powers or strip them away for good.
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