Federal Circuit Says Trump's Global Tariffs Are Illegal, Keeps Duties in Place During Appeal
Court declares most of Trump's global tariffs unlawful — but leaves them in force for now
A rare 7–4 ruling from the U.S. Court of Appeals for the Federal Circuit has dealt a major legal blow to the White House trade agenda. The court said most of the sweeping duties rolled out this spring go beyond presidential powers. Yet the same court kept those duties in place while the government appeals, meaning import costs and retail prices won’t drop anytime soon.
The decision, released Friday, centers on two pillars of the policy: so-called “Reciprocal Tariffs,” a baseline 10% duty announced April 2, 2025, and additional “Trafficking Tariffs.” The measures were unveiled on what the administration branded “Liberation Day,” part of an aggressive push to reset U.S. trade with the world and force trading partners to the table.
Companies and several states sued, arguing the president overstepped his authority under the International Emergency Economic Powers Act (IEEPA). A lower court — the Court of International Trade — agreed in May, granting summary judgment and permanently blocking the program. The government quickly won a stay while it appealed. Now the Federal Circuit, which hears appeals from that trade court, has largely backed the challengers’ reading of the law — with one huge caveat: the tariffs stay in place during the next phase of litigation.
That split outcome means the legal message is clear, but the economic pain continues. Importers will keep paying duties at the border. Consumers won’t see immediate relief on prices for goods hit by the levies. And Treasury Secretary Scott Bessent’s plan to nail down a set of trade deals by Labor Day is officially off schedule.
At the heart of the fight is how far IEEPA can stretch. Presidents have used that law for decades to freeze assets, block transactions, or target specific actors during national emergencies. The majority said the statute doesn’t hand the executive a blank check to rewrite the tariff code wholesale — a power the Constitution assigns to Congress. In plain terms: emergency tools don’t let a president create across-the-board duties that function like a new tariff schedule.
Four judges disagreed, seeing the measures as within a president’s emergency toolkit, especially in fast-moving global disputes. Their dissent underscores why this case is likely headed to the Supreme Court. The appeals court stayed its own mandate to give the government time to seek review, a sign it expects the next step to unfold quickly.
The stakes are real for households and businesses. Over the past five months, the policy sent a shock through supply chains. Trading partners retaliated with their own measures. Importers of electronics, appliances, auto parts, and machinery absorbed higher costs or passed them along to buyers. Retailers rewrote contracts on the fly, then rewrote them again as rates and targets changed. That on-again, off-again uncertainty is exactly what companies say they can’t plan around.
The administration has framed the duties as leverage — a way to force concessions and shrink trade deficits. The president has singled out big partners, including India, accusing them of unfair practices and market barriers. Supporters argue the duties are a necessary shock to a system that disadvantages U.S. workers. Critics say the blanket approach is crude and costly, and that any gains at the bargaining table are swamped by higher prices at home.
Friday’s decision doesn’t end the policy. It tightens the legal boundary lines. Historically, presidents have reached for two other trade laws when imposing broad tariffs: Section 232 of the Trade Expansion Act, tied to national security, and Section 301 of the Trade Act of 1974, tied to unfair trade practices. IEEPA is different — it’s rooted in emergency powers aimed at transactions and property, not a general license to rework tariffs country-by-country or across the board. The court said those differences matter.
Politically, the ruling lands like a thunderclap. Senate Finance Committee Ranking Member Ron Wyden welcomed the decision and called the duties “so-called emergency tariffs.” The White House has defended the policy as a cornerstone of its economic strategy, arguing that pressure is already producing results in talks. Both sides can claim something today: the legal theory took a hit, but the policy survives for now.
The immediate question is timing. The Justice Department can ask the Supreme Court to take the case and to keep the duties in place while it decides. If the justices grant review, the fight could stretch several more months, possibly into next year. If they refuse, the lower court’s judgment would kick in and the administration would have to unwind most of the tariff program.
What importers and consumers should expect in the weeks ahead
Because the tariffs remain in force during the appeal, little changes at the border next week. Importers will keep making duty payments on covered goods and filing entries with U.S. Customs and Border Protection. The expectation inside trade circles: companies will continue to protect their rights by filing protests and keeping records in case refunds become available down the line if the government ultimately loses.
That uncertainty shapes day-to-day decisions. A manufacturer deciding whether to source a component from abroad has to price in duties now, with only a chance of a refund later. A retailer ordering holiday inventory has to forecast exchange rates, shipping costs, and tariffs that might vanish mid-season. Few CFOs enjoy betting the quarter on a court calendar.
Here’s the practical checklist executives are working through while the case moves forward:
- Contracts and pricing: Revisit supplier contracts to spell out who eats the tariff if rates fall or rise. Build in adjustment clauses tied to court milestones.
- Compliance and documentation: Keep meticulous import records, including tariff classifications and country-of-origin proofs, to support protests or refunds if the policy is struck down.
- Cash flow: Model both scenarios — tariffs stay or tariffs go — and plan inventory and financing accordingly.
- Supply routes: Consider diversifying sourcing to countries or products outside the tariff scope, but weigh the switching costs.
Abroad, trading partners are watching the same clock. Some will hold their retaliatory measures steady until the Supreme Court shows its hand. Others might probe for limited deals on specific sectors — a side truce on farm goods here, an industrial carve-out there — to relieve pressure without abandoning their broader stance.
For consumers, the impact is uneven. Big-ticket items with import-heavy supply chains — think home electronics or certain appliances — have been most exposed. Everyday goods sourced from multiple countries can absorb the shock a bit better, though not forever. If the duties persist through the holiday season, you’ll feel it in price tags and fewer markdowns.
The policy also continues to test the line between Congress and the White House on trade. Tariffs are a taxing power, and Congress historically writes the rules. Over the last half century, lawmakers delegated pieces of that authority to the executive under specific conditions. This case — brought by private companies and states and now blessed in large part by the appeals court — signals a judicial push to tighten those delegations and demand clearer instructions from Capitol Hill.
That tug-of-war matters beyond this presidency. If the courts close the IEEPA path for broad duties, future administrations looking to move fast will have to lean harder on Section 232 or Section 301, or go back to Congress for fresh authority. Any of those routes is slower and messier than a single proclamation. But they come with stronger statutory footing, and that’s what the judges focused on.
Markets won’t wait for a final answer. Companies have already shifted orders and rejiggered supply lines. Some costs won’t unwind easily even if duties disappear. Contracts struck at higher prices don’t always get renegotiated overnight. And global competitors have adapted too, routing goods through friendlier hubs or fast-tracking local production to avoid U.S. taxes at the border.
As for the politics, expect a sharper split. Supporters will say the ruling proves why Congress should give presidents more tools to fight what they see as unfair trade. Opponents will point to the court’s majority as proof that the program was too broad from the start. Both messages will filter into talks with allies and rivals who now know the legal foundation under the Trump tariffs is shaky.
Short term, the scoreboard is simple: the tariffs are still here, the legal risk around them just got bigger, and the Supreme Court may have the last word. Until then, importers will keep paying, shoppers will keep seeing higher price tags on certain goods, and negotiators will keep trying to cut deals in a fog of uncertainty that won’t lift for weeks — and maybe months.