President Donald Trump faced a major setback in a federal appeals court over his authority to impose tariffs.
On Friday, the U.S. Court of Appeals for the Federal Circuit released a 127-page opinion, ruling that the president does not have the power to set tariffs under the International Emergency Economic Powers Act (IEEPA).
“[I]n each statute delegating tariff power to the President, Congress has provided specific substantive limitations and procedural guidelines to be followed in imposing any such tariffs,” the court wrote. “It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs. The statute neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President’s power to impose tariffs.”
President Trump quickly responded, promising to take the case to the U.S. Supreme Court.
“Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end,” Trump wrote on Truth Social. “If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong. The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. If allowed to stand, this Decision would literally destroy the United States of America.”
The legal challenges began in April, when V.O.S. Selections, an alcohol importer, along with other businesses, sued over the tariffs, claiming they caused higher costs, supply problems, and financial losses. Later that month, a coalition of 12 Democratic-led states filed a similar lawsuit. The cases were combined.
In May, the plaintiffs won when the Court of International Trade struck down the tariffs in a unanimous ruling. However, that decision was immediately paused by a 10-judge panel of the appeals court.
The new ruling, issued by 11 judges, upheld the lower court’s decision. Judge Pauline Newman, who has been suspended due to health concerns, did not participate. For now, the tariffs remain in place because the appeals court delayed enforcement of its ruling until October 14.
This delay gives the Trump administration time to appeal and also allows the trade court to reconsider whether its nationwide injunction follows the standards set by the Supreme Court in its recent decision on the limits of district court injunctions.
In that case, the high court narrowed the use of universal injunctions. The appeals court, citing this precedent, said the lower court’s universal injunction should be vacated.
In the current case, the 7-4 majority agreed that Trump’s use of IEEPA to impose tariffs was not legally valid.
“We are not addressing whether the President’s actions should have been taken as a matter of policy,” the opinion explained. “Nor are we deciding whether IEEPA authorizes any tariffs at all. Rather, the only issue we resolve on appeal is whether the Trafficking Tariffs and Reciprocal Tariffs imposed by the Challenged Executive Orders are authorized by IEEPA. We conclude they are not.”
The judges said the text of the law strongly suggests Congress did not intend to give the president tariff powers.
“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,” the opinion stated. “The Government locates that authority within the term ‘regulate . . . importation,’ but it is far from plain that ‘regulate . . . importation,’ in this context, includes the power to impose the tariffs at issue in this case.”
The court also warned that the government’s interpretation of IEEPA would raise constitutional issues, since only Congress has the power to tax.
According to the opinion:
The Government’s interpretation of IEEPA would render it an unconstitutional delegation. Because taxation authority constitutionally rests with Congress, any delegation of that authority to the President must at least set out an intelligible principle that includes “both ‘the general policy'” that the President “must pursue and ‘the boundaries of [its] delegated authority.'” Similarly, Congress must “provide sufficient standards to enable both ‘the courts and the public [to] ascertain'” whether the President “has followed the law.” Because this is undoubtedly a case that “affect[s] the entire national economy,” the “‘guidance’ needed is greater . . . than when [Congress] addresses a narrow, technical issue.” For taxes, both “quantitative” and “qualitative limits on how much money” the President can raise are permissible, but it would “pose a constitutional problem” if the “statute gives the [executive branch] power, all on its own, to raise [a] hypothetical $5 trillion” with no “ceiling.”
The opinion concluded that the government’s reading of IEEPA would essentially give the president unlimited taxation power, which is unconstitutional.
