A divided federal appeals court ruled that most of President Donald Trump’s global tariffs were unlawful, holding that he exceeded his authority under the International Emergency Economic Powers Act (IEEPA). In a 7–4 decision on Friday, the U.S. Court of Appeals for the Federal Circuit largely affirmed a May ruling by the Court of International Trade (CIT) but left the tariffs in place while the case continues. The panel remanded for the CIT to reconsider the scope of relief in light of recent Supreme Court limits on broad, nationwide injunctions. The administration immediately highlighted that the levies remain operative during further review, and the opinion sets up parallel tracks: a likely petition to the Supreme Court and a lower-court reassessment of who, if anyone, is entitled to immediate injunctive relief.

What’s covered — and what isn’t

The ruling targets two pillars of the 2025 program. First are the “Liberation Day” tariffs, which established a 10% baseline duty on most imports and “reciprocal” rates (up to 50%) for countries designated by the administration. Second are the “trafficking” tariffs on Canada, China, and Mexico that the White House linked to the fentanyl crisis and border security. The Federal Circuit agreed that IEEPA does not authorize those broad import duties. By contrast, sectoral tariffs imposed under other statutes—such as steel, aluminum, and autos under separate national-security provisions—were not at issue in this case. The court also noted evolving carve-outs and extensions since the program’s launch, a backdrop that left some countries’ final rates unsettled.

The court’s reasoning and the remedy question

Both the CIT and the Federal Circuit concluded that IEEPA’s text—long used for sanctions, embargoes, and asset freezes—does not confer a power to tax imports. The appellate majority wrote that they could “discern no clear congressional authorization” to impose across-the-board tariffs via emergency proclamation; the Constitution places tariff authority with Congress, and nothing in IEEPA explicitly relocates that authority to the Executive. At the same time, the panel vacated the CIT’s universal injunction and ordered the trial court to reconsider the scope of any remedy after the Supreme Court’s recent ruling curbing court-issued relief that extends beyond the parties before it. A four-judge dissent would have rejected summary judgment against the administration on the merits and sent the case back for more proceedings.

That remedial posture matters. If the CIT limits relief to named plaintiffs, most importers would see no immediate change while appeals proceed; if it reinstates broader relief consistent with the high court’s guidance, a larger swath of the tariff regime could be suspended sooner. Either way, the Federal Circuit’s merits holding—that IEEPA does not authorize the challenged duties—now anchors the litigation unless the Supreme Court says otherwise.

Administration response, financial exposure, and market stakes

The White House emphasized continuity: “ALL TARIFFS ARE STILL IN EFFECT!” the president posted soon after the ruling, calling the decision “highly partisan” and predicting an ultimate win. Treasury and Commerce officials, in filings before the decision, warned of diplomatic and fiscal fallout if the courts abruptly pulled the tariffs, and Justice Department papers raised the prospect of “financial ruin” absent the revenue stream. Public reporting has tracked significant tariff receipts since the program began, while industry groups and states challenging the policy have argued that a final defeat could require refunding duties already paid. With the import taxes left standing, trading partners and companies remain in a holding pattern while the government pursues further review.

The ruling also narrows one of the administration’s main levers in trade negotiations. Analysts note that the IEEPA-based structure made it possible to roll out sweeping measures quickly; losing that authority constrains future efforts to set global baselines or leverage “reciprocal” rate tables outside of congressionally delegated trade statutes. The panel’s decision does not unwind other authorities the president has invoked—such as Section 301 for unfair trade practices or the national-security tariff statutes—but it does curtail reliance on emergency powers to tax imports.

Next steps and the broader legal landscape

Procedurally, two tracks are in view. First, the administration can ask the Supreme Court to review the Federal Circuit’s IEEPA holding. The appellate court built time into its disposition by leaving the tariffs in place during the next phase. Second, on remand, the CIT must recalibrate any injunction to comply with Supreme Court guidance limiting universal relief. Parallel challenges are also pending, including cases testing the same IEEPA theory, adding to the probability that the Supreme Court will be asked to resolve the scope of presidential emergency power over imports.

The administration retains alternative, narrower levers. Section 122 of the Trade Act of 1974 allows temporary (150-day) duties of up to 15% on countries with large trade deficits, and Section 301 supports tariffs after findings of unfair practices. Those tools are more constrained than a global baseline set by emergency proclamation, and they require process or face time limits, but they remain available and have been used in prior trade disputes, including earlier U.S.–China actions. As litigation proceeds, policymakers and businesses will watch whether the White House pivots to those paths or continues to bank on a Supreme Court rescue for the IEEPA-based program.

The stakes extend beyond import rates. If the IEEPA theory ultimately fails and broader relief takes effect, the government could face claims for refunds on duties collected under the invalidated orders. The Federal Circuit’s choice to leave the tariffs standing blunts immediate disruption but preserves that downstream risk if the Supreme Court affirms. For trading partners, the ruling complicates efforts to negotiate exemptions or adjust to “reciprocal” matrices tied to U.S. bilateral deficits; for domestic companies, it sustains pricing and supply-chain uncertainty pending final judgment.

Bottom line

The Federal Circuit held that IEEPA does not authorize the president’s sweeping “Liberation Day,” “reciprocal,” and “trafficking” tariffs, but it let the duties stand for now and directed the trial court to revisit the breadth of any injunction. The decision leaves the core policy legally vulnerable while preserving the status quo during further review. The administration has signaled it will seek Supreme Court intervention; opponents are preparing to press for tailored relief and, ultimately, refunds if the program is struck down for good. Until then, the contested tariffs remain in force and the legal fight over emergency-based tariff power moves to its next stage.