In a major legal setback for the Trump administration, the US Court of Appeals for the Federal Circuit ruled on Friday, 29th August, that most of Donald Trump’s tariffs were illegal. The court’s strong observations challenged the very foundation of Trump’s trade policy. Reacting swiftly, the US President warned that lifting these tariffs would create chaos, calling it nothing short of a disaster for the country.

The ruling did not immediately strike down the tariffs. Instead, the court allowed the administration the chance to appeal before the Supreme Court. However, the judgment was a stern reminder that the President’s authority has limits. The judges noted that Trump had exceeded his powers under the 1977 International Emergency Economic Powers Act (IEEPA), which he had invoked to justify broad tariffs on countries across the globe.

“It seems unlikely that Congress intended to grant the President unlimited authority to impose tariffs,” the court stated in a 7-4 ruling. While acknowledging that the President enjoys wide powers during a declared national emergency, the court clarified that these do not extend to taxation or tariff imposition.

In sharp words, the bench added: “The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.”

The IEEPA was originally designed to empower the President to regulate commerce during emergencies by freezing assets and imposing sanctions in matters of foreign relations. Congress intended it as a defensive tool, allowing the President to restrict commercial transactions when the nation faced external threats—not as a free pass for sweeping tariff policies.

Removal of Tariffs Will Destroy America: Trump

The verdict immediately triggered a furious response from Trump, who turned to his platform, Truth Social, to make his position clear. Branding the ruling as politically motivated, he declared: “ALL TARIFFS ARE STILL IN EFFECT! Today, a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong.”

The President argued that tariffs were essential to protect American farmers, manufacturers, and workers from being undermined by unfair trade practices abroad. Stressing that he would not tolerate trade deficits, Trump emphasized: “The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and non-tariff trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. If allowed to stand, this Decision would literally destroy the United States of America.”

In his response, Trump revisited his long-standing argument that “unwise politicians” in the past had failed to protect the US economy, which allowed foreign nations to exploit America. He promised that his administration’s tariff policy would continue to “Make America Rich, Strong, and Powerful Again!”

Supporting Trump’s stance, Attorney General Pam Bondi accused the judiciary of intruding into foreign policy, an area traditionally controlled by the President. She confirmed that the administration would challenge the ruling before the Supreme Court.

Trump’s tariff program, launched soon after he assumed office earlier this year, had been one of his most aggressive trade measures. By April, his administration imposed a 10% baseline tariff on almost every country, raising it up to 50% for nations running trade deficits with the US. Over time, these tariffs became even more unpredictable, with countries like India targeted not just for trade reasons but for geopolitical decisions, such as purchasing oil from Russia. In fact, Trump recently doubled tariffs on India from 25% to 50% for this very reason.

Trump Cites “Unusual and Extraordinary” Threat to Justify Tariffs

President Trump defended both the original and later tariffs under the International Emergency Economic Powers Act (IEEPA). This law allows the President to act when facing an “unusual and extraordinary” threat during national emergencies. Trump argued that America’s long-standing trade deficits, declining manufacturing power, and the inflow of drugs across borders justified his use of emergency powers to impose tariffs.

Historically, IEEPA had been applied in a very different way. Past presidents mainly used it to impose sanctions on hostile nations or freeze assets in times of crisis. Trump, however, became the first President to use IEEPA as a tool for setting tariffs. His Department of Justice defended the decision by claiming that the law’s emergency provisions allowed the President to “regulate” imports, which they argued could include blocking, limiting, or taxing them through tariffs.

DOJ’s Pushback and Pressure over Other Legal Cases

While the administration was defending its tariffs, it came under unrelated scrutiny on another legal matter. Under pressure to release records connected to the investigation of Jeffrey Epstein, the Department of Justice instead made public an interview with his imprisoned associate, Ghislaine Maxwell. This move highlighted how the administration was juggling multiple legal battles even as it confronted strong challenges to its trade policies.

Court Pushback: Emergency Powers Do Not Include Tariffs

Judges at the appeals court strongly disagreed with the administration’s interpretation of IEEPA. In their ruling, they made clear:

“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.”

They further added:

“It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs.”

This language underscored that Congress never meant for IEEPA to be a blank check for presidents to redesign trade policy or impose new taxes on imports.

Emergencies Must Be Genuine, Not Decades-Old Problems

Trump had declared a national emergency in April, pointing to America’s persistent trade deficit as a threat that weakened the nation’s industrial strength and even its military readiness. He also justified tariffs against China, Canada, and Mexico by linking them to the flow of illegal fentanyl across U.S. borders, claiming those countries were not doing enough to stop the drug trade. Those governments, however, rejected his accusations.

Courts pushed back, stressing that trade deficits and drug smuggling, while serious, were not the kind of sudden external emergencies that IEEPA was designed to address.

Plan B: Preparing for the Supreme Court

Experts said the Trump administration had been anticipating this outcome. William Reinsch, a former senior Commerce Department official, observed:

“It's common knowledge the administration has been anticipating this outcome and is preparing a Plan B, presumably to keep the tariffs in place via other statutes.”

Financial markets showed little immediate response to the ruling, though some analysts warned that the legal uncertainty could unsettle businesses already dealing with unpredictable trade conditions. Art Hogan, a chief market strategist, warned:

“The last thing the market or corporate America needs is more uncertainty on trade.”

Meanwhile, Trump’s wider economic agenda appeared headed for further confrontation. He was also engaged in a legal fight to remove Federal Reserve Governor Lisa Cook, a move critics said threatened the independence of the central bank. Josh Lipsky of the Atlantic Council remarked:

“I think it puts Trump's entire economic agenda on a potential collision course with the Supreme Court. It's unlike anything we've seen ever.”

The appeals ruling itself came from two consolidated cases—one filed by five small U.S. businesses and another by twelve Democratic-led states. Both argued that IEEPA did not authorize tariffs. Earlier, in May, the U.S. Court of International Trade had ruled against Trump’s tariff policies, saying the President had exceeded his authority. Even one judge appointed by Trump joined the panel that decided against him.

Other courts also struck down his interpretation, with at least eight lawsuits already filed—including one led by the state of California. For now, the appeals court has kept the tariffs in place temporarily, giving the administration time to take the fight to the Supreme Court.

Impact of the US Court’s Decision on Tariffs Levied on India

While the court’s ruling casts doubt on the legality of tariffs imposed under IEEPA, reports suggest that India may not see relief anytime soon. Analysts point out that Trump, aware of possible judicial intervention, used a combination of legal justifications for subsequent tariffs on India. This included measures outside the IEEPA framework, ensuring that punitive duties against India would remain intact even if the court’s decision limits his emergency powers.

In other words, although many countries could see tariff relief if the Supreme Court upholds the ruling, India is unlikely to benefit. Trump’s government structured Indian tariffs in a way that made them resistant to being overturned by courts. The decision reflects Trump’s focus on India as both a key economic rival and a strategic player in the global energy market.