Washington, DC: A divided US Court of Appeals has ruled that most of former President Donald Trump’s tariffs are illegal. The 7-4 decision came from the US Court of Appeals for the Federal Circuit in Washington, DC. However, the court allowed the tariffs to remain in place until October 14, giving the Trump administration time to appeal to the US Supreme Court.
Which tariffs were challenged
The ruling focused on “reciprocal” tariffs Trump imposed in April during his trade war, and another set imposed in February against China, Canada, and Mexico. The cases were filed by five small US businesses and 12 Democratic-led states, which argued that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose such tariffs
Tariffs not affected
The court’s decision does not apply to other Trump-era tariffs, including those on steel, aluminum, and automobiles, which were imposed after national security investigations. It also does not affect tariffs on China maintained by President Joe Biden from Trump’s first term.
What happens now
With the court allowing time for an appeal, the tariffs will remain in effect until October 14. Trump has vowed to take the case to the Supreme Court, warning that striking down the tariffs could harm the United States. The government has argued that canceling the tariffs may require refunding import taxes already collected, causing financial losses for the US Treasury. The Justice Department also called revoking the tariffs potentially financially ruinous.
Court’s view on presidential authority
The US court noted that while IEEPA allows the president to act during national emergencies, it does not explicitly give the power to impose tariffs or taxes. The court said, “It seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs,” highlighting limits on presidential powers.
Trump’s justification
Trump defended the tariffs, citing trade imbalances, declining US manufacturing, and cross-border drug flows. He declared a national emergency in April over the persistent trade deficit and argued that tariffs against China, Canada, and Mexico were needed to address issues like illegal fentanyl imports—claims the countries denied.
Implications for Indian markets
If the Supreme Court upholds the ruling, it could reduce US import duties, lower costs for companies importing goods from India, and potentially benefit Indian exporters. Markets may react positively to lower trade barriers and smoother global supply chains.
