US Court Rejects Presidential Tariff authority under IEEPA

One of the biggest decisions in the United States has restricted the power of the president to impose tariffs using the emergency powers. In a 7-4 ruling issued by the US Court of Appeals for the Federal Circuit, on 29 August 2025, the former president Donald Trump was found guilty of illegality in his tariff orders under the International Emergency Economic Powers Act (IEEPA), 1977. According to the court, IEEPA does not give generalized power to unilateral tariffs. The court judgment, which affirms an earlier Manhattan Trade Court decision, is on hold pending appeal to the Supreme Court in October.

IEEPA Background

IEEPA came into force in 1977, and substituted the Trading with the Enemy Act of 1917. It permits the presidents to proclaim national emergencies whenever they perceive foreign threats and issue sanctions without Congressional endorsement. Historical applications can be found in the Iran hostage crisis in 1979 and the freezing of assets after 9/11.

Trump's Tariff Orders

Trump used IEEPA as an excuse to impose sweeping tariffs on Mexico, Canada, China and others based on trade deficits, immigration and drug smuggling. He declared in February 2025 that Mexico and Canada would have 25 percent tariffs and a 10 percent base tariff in April.

Legal Challenges

Small businesses and a number of states filed a lawsuit claiming economic damages and presidential overreach. In May 2025, the US Court of International Trade held that IEEPA does not support global or retaliatory tariffs, invalidating levies associated with fentanyl regulation as having nothing to do with the emergency proclaimed. These findings were upheld in August by the Federal Circuit.

Other Tariff Laws not Yet Repealed.

The decision has no influence on the tariffs under other trade laws:

• 232 (1962 Trade Expansion Act): steel, aluminium, autos, copper (national security).
• Section 201 (1974 Trade Act): solar panel protection.
• Section 301: custom duties on unfair trade in China.

Significance

The ruling enhances congressional authority over trade policy, limits executive discretion during emergency situations. It explains that the general economic activities should be anchored on explicit legal authority, to redefine the balance of power in the US trade governance.