In brief
In a recent ruling, a federal appeals court found that many of former President Donald Trump's tariffs, enacted under the guise of emergency powers, are unlawful. While the decision has not yet halted the tariffs, it signals an impending legal challenge at the U.S. Supreme Court. The ruling raises significant questions about the economic impact on U.S. businesses and international trade relations as Trump plans to appeal the decision. Key insights into the implications of this ruling and what lies ahead are discussed.
What happens next after Trump tariffs ruled illegal?
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.
What did the appeals court say?
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 US Court of Appeals rejected Trump's argument that the tariffs were permitted under his emergency economic powers, calling the levies invalid as contrary to law.
Trump immediately criticised the judgement, taking to Truth Social in the hours after it landed to call the appeals court highly partisan and the ruling a disaster for the country.
What is the IEEPA?
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.
The 1977 law states that a president can pull a number of economic levers to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy or economy.
But the appeals court stated in its decision that the emergency law did not give the president wide-ranging authority to impose tariffs.
Why is this important?
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.
What happens next?
The case will now most likely proceed to the highest US court, a challenge that Trump signalled on Truth Social.
If the Supreme Court affirms the decision, it could trigger uncertainty in financial markets.
What if the tariffs are ruled illegal?
The federal appeals court was divided 7-4 in its decision that Trump's nearly universal tariffs are illegal. It has now given the US administration until mid-October to appeal to the US Supreme Court on a case with implications for both the US economy and its trade relationship with the rest of the world.
Are there still tariffs in place?
This ruling affects Trump's reciprocal tariffs, which includes a patchwork of different rates on most countries around the world, including taxes slapped on products from China, Mexico and Canada. Those levies on nearly all goods from nearly every country with which the US conducts trade will remain in place until mid-October.
