A U.S. federal appeals court has delivered a critical verdict against President Donald Trump’s trade policy, ruling that a trade deficit cannot be used as a “national emergency” to justify sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). The decision dismantles the legal argument behind a key part of his global economic strategy.
The court concluded that Trump exceeded the authority granted by Congress when he repurposed the IEEPA—a law meant for sanctioning rogue states or freezing terrorist funds—to impose levies on nearly all U.S. trading partners. The judges highlighted that the statute’s text does not provide for the imposition of tariffs, a power traditionally held by the legislative branch.
This ruling could have a domino effect, undermining the stability of informal trade agreements the Trump administration negotiated with countries like Japan and the EU. These deals were largely accepted to avoid the tariffs that the court has now declared were illegally imposed, raising questions about their continued validity.
While Trump has announced his intent to appeal, the decision marks a significant win for opponents of his protectionist measures. It also raises the critical constitutional issue of how much power the executive branch can wield unilaterally in the name of a crisis, a question that will likely be settled by the Supreme Court.