Appeals Court Declares Trump Tariffs Unlawful: What Lies Ahead?

A federal appeals court has ruled that most of Donald Trump's tariffs are an overreach of his use of emergency powers as president.

The so-called reciprocal tariffs - imposed on nearly every country the US trades with - are being illegally imposed, the US Court of Appeals said on Friday.

The decision upholds a ruling in May from the Court of International Trade, which also rejected Trump's argument that his global tariffs were permitted under an emergency economic powers act.

Many of the tariffs that would be affected by the ruling stem from an announcement in April of a flat 10% rate on imports from all countries, which Trump said would even out unfair trade relations with the US.

The court did not halt the tariffs but instead said they would remain in place until mid-October, setting up a further legal challenge in the US Supreme Court.

There are still a lot of unknowns, but here's what we understand so far about the ruling - and what it could mean for the US president's flagship policy.

In its 7-4 decision, the appellate court backed a lower court's finding that Trump did not have the authority to impose global tariffs.

This was largely because of the law Trump used to justify the policies, the International Emergency Economic Powers Act (IEEPA), which the judges said did not grant the power to impose tariffs, duties, or the like, or the power to tax.

The decades-old act, which has repeatedly been deployed by Trump during both his terms in office, grants a US president significant authority to respond to a national emergency or a major threat from overseas.

But the appeals court stated that the emergency law did not give the president wide-ranging authority to impose tariffs. 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, they said.

Beyond being a significant setback to a centrepiece of Trump's agenda, the federal appeals court ruling could have an immediate impact on the US economy, with knock-on effects felt in global markets. Tariffs are taxes companies have to pay for importing certain goods from foreign countries - so they can have an effect on sales and profit margins.

As countries wait to see if the US Supreme Court will take up the case - which seems likely - they could decide to hold off on conducting business with the US.

The case will now most likely proceed to the highest US court, a challenge that Trump signalled on Truth Social. The conservative majority on the US Supreme Court could potentially make it more likely to side with the president's view.

If the Supreme Court affirms the decision, it could trigger uncertainty in financial markets. There will be questions over whether the US will have to pay back billions of dollars that have been gathered by import taxes on products.

This ruling affects Trump's reciprocal tariffs, which includes a patchwork of different rates on most countries around the world. Those levies on nearly all goods from nearly every country with which the US conducts trade will remain in place until mid-October. After that, they will no longer be enforceable.