A US federal appeals court raised serious doubts about President Donald Trump’s authority to impose broad tariffs under emergency powers. During a hearing in Washington, D.C., judges questioned whether the International Emergency Economic Powers Act (IEEPA) grants the president the legal right to impose tariffs on allied nations like Canada, China, and Mexico.
Trump had used IEEPA to introduce what he called “reciprocal” tariffs in April and further increased them in February. The case now before the U.S. Court of Appeals for the Federal Circuit was brought by five small businesses and 12 Democratic-led states. They argue that Trump overstepped his powers and that only Congress has the constitutional right to set tariffs and taxes.
Government lawyer Brett Shumate defended Trump’s move, saying IEEPA gives the president broad authority in economic emergencies, including regulating imports. But Judge Jimmie Reyna responded, “IEEPA doesn’t even mention tariffs.” Several judges appeared skeptical throughout the 90-minute hearing, which concluded without a ruling date.
The outcome of this case could have major implications. Trump, who made tariffs a key trade tool during his second term, claims they helped address unfair trade practices and boosted U.S. manufacturing. He cited the U.S. trade deficit and illegal fentanyl imports as justification. However, critics argue these reasons do not constitute an “extraordinary threat” under the law.
Earlier this year, a lower court also ruled that IEEPA does not support tariffs based on long-term trade imbalances. The appeals court has allowed the tariffs to stay in place while legal challenges continue.
With customs duties now generating over $100 billion in revenue this fiscal year, tariffs have become a significant funding source. Still, economists warn that they raise consumer prices and disrupt supply chains. The Trump administration argues that removing tariff power could harm trade negotiations, although recent deals with the EU, Japan, and others have moved forward.
Trump has warned of further tariff hikes on countries not reaching new trade deals by August 1. The final decision in this case is likely to head to the U.S. Supreme Court if either side loses.
