Tariffs voided in court ruling

President Donald Trump’s aggressive trade agenda hit a significant snag this week when a federal appeals court ruled that most of his “reciprocal tariffs” are illegal.

The U.S. Court of Appeals for the Federal Circuit held Friday that Trump overstepped his presidential authority when he imposed levies on virtually every country in the world as part of his April 2 “liberation day” announcement.

Before court action, Trump’s tariffs were set to affect roughly 69% of U.S. goods imports, according to the Tax Foundation. If struck down, the duties would impact just roughly 16%.

The ruling injects a heavy dose of uncertainty into a central tenet of Trump’s economic agenda, which has rattled the global economy since April.

For now, the appeals court ruling states the duties on goods from most countries — as high as 50% for a few countries — will stay in effect until Oct. 14, to allow the Trump administration time to appeal the decision to the U.S. Supreme Court.

The appeals court decision affects the “reciprocal tariffs” Trump announced on April 2, as well as levies he had previously imposed on Mexico, Canada and China.

Trump cited the 1977 International Emergency Economic Powers Act to justify his sweeping tariffs. He declared the United States’ trade deficit with other nations a national emergency, and invoked IEEPA to impose the steep levies.

The appeals court ruled, however, that IEEPA does not give him authority to implement the tariffs, stating that power resides solely with Congress.

“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said in its 7-4 ruling.

The ruling puts Trump’s levies, which took effect earlier this month after multiple delays, on shaky ground. Trump imposed the tariffs on more than 60 countries, including a 50% rate on India and Brazil. He also imposed a 10% baseline tariff on most other countries that were not hit with a specified reciprocal tariff rate.

The court also deemed Trump’s tariffs on China, Canada and Mexico — which the administration claimed were necessary because the countries were not doing enough to curb the alleged trafficking of fentanyl into the U.S. — were illegal.

Trump has said that he will appeal the ruling to the Supreme Court. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote on social media.

If the high court ultimately determines that the tariffs are illegal, there are still other ways for Trump to implement levies, but the scope would likely be much more restricted.

For instance, Trump could invoke the 1974 Trade Act, but that law caps tariffs at 15% and only for 150 days, unless Congress extends them.