The fate of President Donald Trump’s sweeping tariffs on foreign imports is hanging in the balance after a federal appeals court delivered a stinging rebuke to his use of emergency powers. In a landmark decision on September 2, 2025, the U.S. Court of Appeals for the Federal Circuit ruled 7-4 that Trump had overstepped his legal authority when he invoked the International Emergency Economic Powers Act (IEEPA) to justify levying tariffs on nearly every country. Yet, in a twist that has left businesses, trading partners, and politicians alike in suspense, the court allowed the tariffs to remain in effect for now—at least until mid-October—while the Trump administration prepares its final appeal to the Supreme Court.
According to AP, the ruling largely upholds a May 28, 2025 decision by the U.S. Court of International Trade in New York, which had similarly concluded that Trump’s use of IEEPA to impose tariffs was unlawful. The appeals court’s majority opinion was clear: “It seems unlikely that Congress intended to … grant the President unlimited authority to impose tariffs.” This is a rare judicial check on presidential power in the realm of trade, an area where courts have traditionally deferred to the executive branch.
But the legal drama is far from over. The appeals court specifically allowed the tariffs to remain in place through at least October 14, 2025, to give the Trump administration time to make its case before the nation’s highest court. The U.S. Court of Appeals also instructed the trade court to reconsider whether its decision to block the tariffs should apply universally or only to the parties who filed suit, a procedural wrinkle that could affect the scope of any eventual remedy.
President Trump, never one to shy away from a fight, has promised to take the battle all the way to the Supreme Court. On his social media platform, he wrote, “If allowed to stand, this Decision would literally destroy the United States of America.” White House spokesman Kush Desai echoed Trump’s determination, stating the administration “acted lawfully” and was looking forward to “ultimate victory on this matter.”
For American businesses, the stakes are enormous. Jeffrey Schwab, director of litigation at the Liberty Justice Center, which represents small businesses affected by the tariffs, said, “This decision protects American businesses and consumers from the uncertainty and harm caused by these unlawful tariffs.” Still, as Jake Colvin, president of the National Foreign Trade Council, pointed out, “If these tariffs are ultimately struck down, it ought to serve as a wake up call for Congress to reclaim its constitutional mandate to regulate duties and bring some long-term certainty for U.S. businesses and relief for consumers.”
The controversy centers on two sets of tariffs. The first, announced on April 2, 2025—dubbed “Liberation Day” by Trump—imposed “reciprocal” tariffs of up to 50% on countries with which the U.S. runs trade deficits, and a baseline 10% tariff on almost all other nations. These rates, revised after various rounds of negotiation, generally took effect August 7, 2025. Trump justified the move by declaring a national emergency over the long-standing U.S. trade deficit, which he characterized as an “unusual and extraordinary” threat.
The second set, known as “trafficking tariffs,” targeted imports from Canada, China, and Mexico starting February 1, 2025. Trump cited another national emergency: the illegal flow of drugs and immigrants across U.S. borders. The courts, however, were unconvinced. The trade court found that the tariffs did not “deal with” the problem they were supposed to address, as required by IEEPA.
It’s worth noting that revenue from these tariffs has been staggering. According to AP, the U.S. Treasury has collected $159 billion in tariff revenue so far this year—more than double what it took in at the same point last year. The government has warned that if the tariffs are struck down, it may have to refund much of that money, a prospect some officials describe as “financial ruin.” Trade attorney Ryan Majerus, a former White House economic adviser, explained, “For all the tariffs that have been collected under IEEPA, you’re going to see folks request refunds and more refunds.”
The legal battle has also exposed deep divisions within the judiciary. Dissenting judges argued that the 1977 IEEPA is not an unconstitutional delegation of legislative authority, citing Supreme Court precedents that have allowed Congress to grant some tariff powers to the president. Attorney General Pam Bondi accused the judges of interfering with the president’s central role in foreign policy and vowed to appeal.
The ripple effects of the ruling are already being felt in Washington. Democratic Senator Ron Wyden of Oregon announced he would push for votes to repeal what he called “harmful, regressive taxes” at every opportunity. Meanwhile, the ruling complicates Trump’s ambitions to use tariffs as leverage in trade negotiations with allies such as the European Union and Japan. Ashley Akers, senior counsel at Holland & Knight and a former Justice Department trial lawyer, noted before the decision, “The administration could lose a pillar of its negotiating strategy.”
Interestingly, the ruling does not affect other tariffs imposed under Section 232 of the Trade Expansion Act (covering steel, aluminum, and autos) or Section 301 of the Trade Act (used to counter unfair practices by China). Those remain in force, meaning the U.S. trade landscape is as complex as ever.
Historically, Congress has held the constitutional power to impose tariffs, but over the decades, lawmakers have gradually ceded significant authority to the executive branch. Trump has pushed those boundaries further than any recent president. No previous administration had used IEEPA to justify tariffs; the law had mostly been invoked for export controls and sanctions against adversaries such as Iran and North Korea. Plaintiffs in the current lawsuits argued that the persistent U.S. trade deficit hardly constitutes the sort of “unusual and extraordinary” threat envisioned by the emergency law.
For now, the business community is holding its breath. The Toy Association, which represents a sector particularly vulnerable to global tariffs, said it is monitoring the situation closely and will provide updates as the case advances to the Supreme Court. The uncertainty is palpable: will the Supreme Court uphold the lower courts’ rebuke, or will it restore Trump’s broad tariff powers?
One thing is certain—this legal showdown is about more than just trade policy. It’s a test of the limits of presidential power, the role of Congress, and the stability of the global economic order. As the October deadline approaches, all eyes are on the Supreme Court, waiting to see which way the scales of justice will tip.
