Court Rules Against President Trump’s “Liberation Day” Tariffs but All Tariffs Remain in Effect as the President Appeals

Late Friday, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court ruling declaring unlawful President Trump’s tariffs predicated on the International Emergency Economic Powers Act (IEEPA). All of President Trump’s tariffs remain in effect for now, however, because the appellate court stayed its order until October 14^th to allow the Administration time to appeal the ruling to the U.S. Supreme Court. The White House said it will appeal the decision. MCAA’s public policy team has been monitoring this litigation since highlighting its potential to block the President’s IEEPA-based tariffs at the May Government Affairs Committee meeting in Washington, D.C.

Tariffs Impacted by the Appellate Court Decision

If the appellate court decision stands, it would invalidate all the IEEPA-based “Liberation Day” reciprocal tariffs President Trump announced on April 2^nd, and that took effect last month after several delays. These are the tariffs that impose baseline levies of 10% on virtually all countries, as well as steeper tariffs on countries the Trump Administration considers bad actors on trade with U.S. The decision also invalidates the President’s IEEPA-based tariffs imposed on Mexico, Canada, and China.

Tariffs Not Impacted by the Appellate Court Decision

The ruling does not impact the tariffs President Trump imposed under the authority of section 232 of the Trade Expansion Act of 1962 and section 301 of the Trade Act of 1974 on copper, steel, aluminum, shipbuilding, and automobiles. There are lawsuits challenging some of these tariffs, but these tariffs are more likely to withstand court challenges because they rely on laws expressly granting the President the power to impose levies on foreign goods. The tariffs that President Trump imposed on China during his first term that were maintained by President Biden are also unaffected by the appellate court decision to the extent they relied on section 232 and section 301 authorities.

The Appellate Court’s Decision

In its 7-4 ruling against the Administration, the appeals court’s majority said IEEPA “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 court explained that when “Congress intends to delegate to the President the authority to impose tariffs, it does so explicitly,” because the power to “impose taxes such as tariffs” is a “core Congressional power” that “is vested exclusively in the legislative branch by the Constitution.” The court also said that the unprecedented and “transformative” nature of President Trump’s tariff policy implicated the “major questions doctrine” the Supreme Court used to strike down Biden Administration policies, such as student debt relief, that the high court felt represented exercises of power far beyond the regulatory authority Congress had delegated to the executive branch. The court did not divide along partisan lines as judges appointed by presidents of both parties joined the majority and dissenting opinions in this case.