President Donald Trump’s cornerstone economic policy was dealt another setback Friday when a federal appeals court ruled he did not have the authority to impose most of his sweeping tariffs on imports from dozens of trading partners.
Trump’s tariffs will remain in effect for now, giving the U.S. Supreme Court time to appeal. U.S. Attorney General Pam Bondi tweeted Friday evening that the Justice Department would appeal the decision.
The U.S. Court of Appeals ruled 7-4, upholding a lower court’s decision that Trump had exceeded his authority by using a 1977 law, the International Emergency Economic Powers Act (IEEPA), to impose most of his tariffs. Historically, this emergency law has been used to impose economic sanctions in response to threats to the country.
“The law grants the President substantial authority to take a number of actions in response to a declared national emergency, but none of these actions expressly includes the power to impose tariffs, duties, or other charges, or the power to tax,” a panel of federal judges wrote in its decision. “In the absence of valid authorization from Congress, the President has no power to tax.”
This decision casts new uncertainty over the future of Trump’s core economic policy, coming just weeks after the president announced tariff increases on more than 60 countries around the world. These tariffs on many countries represent higher levels than those initially proposed by Trump in April, but they add far higher taxes than those the country has imposed in recent decades.
On Friday, Trump criticized the decision on Truth Social: “A very partisan appeals court wrongly ruled that our tariffs should be lifted, but they know that the United States of America will ultimately prevail. If these tariffs are lifted, it will be a total disaster for the country.”
A group of state governments and small businesses filed a lawsuit, arguing in part that there was no emergency justifying Trump’s use of this law. The Trump administration challenged the ruling, arguing that the trade deficit the United States has run every year since 1975 constitutes an emergency.
The Libertarian Justice Center, which represents small businesses in the lawsuit, said Friday that it would continue to argue the case before the Supreme Court.
“The President cannot legally impose tariffs on his own; the IEEPA does not grant him unlimited unilateral tariff authority,” Jeffrey Schwab, senior counsel and director of litigation, said in a statement. “This decision protects American businesses and consumers from the uncertainty and harm caused by these unlawful tariffs.”
The four dissenting justices wrote that “the IEEPA embodies Congress’s explicit grant of broad emergency authority in the area of foreign affairs.”
The White House could use other methods to impose tariffs, including legislation to impose tariffs on steel, aluminum, and auto imports, if Trump’s use of the International Emergency Economic Powers Act (IEEPA) is ultimately overturned by the courts, but that will take time.
In his post on Truth Social, Trump asserted that the tariffs remain in place, writing: “The United States of America will no longer tolerate massive trade deficits, unfair tariffs, and non-tariff barriers imposed by other countries, friend and foe, that harm our manufacturers, farmers, and everyone else. If this order stands, it will literally destroy the United States of America.”
The appeals court also sent part of the case back to a lower court to reconsider whether the government should refund the tariffs to all companies that have already paid them, or only to those that have sued the government.