A US appeals court has ruled that most tariffs issued by US President Donald Trump are illegal, potentially removing a foreign policy tool that Trump has used extensively during his second term in office.
The ruling affects Trump's reciprocal tariffs, imposed on most countries around the world, as well as other tariffs slapped on China, Mexico and Canada.
In a 7-4 decision, the US Court of Appeals for the Federal Circuit rejected Trump's argument that the tariffs were permitted under his emergency economic powers act, calling them invalid as contrary to law.
The ruling will not take effect until 14 October to give the administration time to ask the Supreme Court to take up the case.
Trump had justified the tariffs under the International Emergency Economic Powers Act (IEEPA), which gives the president the power to act against unusual and extraordinary threats. Trump has declared a national emergency on trade, arguing that an imbalance is harmful to US national security. But the court ruled that imposing tariffs is not within the president's mandate, and that they are a core Congressional power.
The 127-page ruling states that the IEEPA neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President's power to impose tariffs.
Thus, the power to impose taxes and tariffs continues to belong to Congress, the court ruled, and the IEEPA does not override this.
The court specified that it is unlikely that when Congress passed the law it intended to depart from its past practice and grant the President unlimited authority to impose tariffs. Whenever Congress intends to delegate to the President the authority to impose tariffs, it does so explicitly, either by using unequivocal terms like tariff and duty, or via an overall structure that makes clear that Congress is referring to tariffs, the judges elaborated.
The ruling comes in response to lawsuits filed by small businesses and a coalition of US states. These lawsuits were initiated after Trump's executive orders in May, which imposed a 10% tariff on every country in the world, in addition to reciprocal tariffs on numerous countries. Trump declared the date to be America's liberation day from unfair trade policies.
This ruling also strikes down tariffs on Canada, Mexico and China, which Trump argues are necessary to curb the importation of drugs and illegal migrants.
However, the ruling does not apply to tariffs imposed on steel and aluminum, which were implemented under a different presidential authority. Earlier this year, the New York-based Court of International Trade had also declared those tariffs unlawful, in a separate case that has been appealed by the White House.
