US Court Limits Presidential Tariff Powers Under IEEPA
Recent developments in the United States have challenged the scope of presidential authority in imposing tariffs under emergency powers. On 29 August 2025, the US Court of Appeals for the Federal Circuit ruled 7-4 that several tariff announcements by President Donald Trump were illegal. The court held that the President does not have wide-ranging authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977. This ruling upheld an earlier decision by a Manhattan Trade Court but has been stayed until October pending an appeal to the Supreme Court. This case marks tensions between executive power and legislative oversight in trade policy.
Background of the International Emergency Economic Powers Act (IEEPA)
The IEEPA was enacted in 1977 to replace the Trading with the Enemy Act of 1917. It grants the US President authority to declare a national emergency in response to unusual threats from abroad affecting national security, foreign policy, or the economy. Under this law, the President may impose sanctions or restrictions without prior Congressional approval. Historically, presidents have used IEEPA to freeze assets or impose sanctions during crises, such as the 1979 Iran hostage crisis and after the September 11 attacks in 2001.
Trump’s Use of Emergency Powers for Tariffs
Donald Trump invoked the IEEPA multiple times to justify tariffs aimed at reducing the US trade deficit. His administration imposed sweeping tariffs on imports from Mexico, Canada, China, and other countries, citing a national emergency due to unfair trade practices and lack of reciprocity. Notably, in February 2025, he announced 25% tariffs on Mexico and Canada to pressure them on immigration and drug trafficking issues. In April, he introduced a 10% baseline tariff and additional reciprocal tariffs targeting countries with large trade surpluses against the US.
Legal Challenges and Court Rulings
Several American small businesses and Democratic-led states challenged Trump’s tariff orders, arguing they caused economic harm and exceeded presidential authority. The US Court of International Trade ruled in May 2025 that IEEPA does not authorise unlimited tariffs. It found the worldwide and retaliatory tariffs unlawful and invalidated tariffs related to fentanyl control, stating these tariffs did not directly address the declared emergency. The Federal Circuit court’s August ruling upheld these findings, limiting the President’s power to impose tariffs under IEEPA.
Impact on Other Tariff Measures
The rulings do not affect tariffs imposed under other trade laws. These include Section 232 of the Trade Expansion Act of 1962, which allows tariffs on steel, aluminium, automobiles, and copper based on national security investigations. Tariffs on solar panels under Section 201 of the Trade Act of 1974, and Section 301 tariffs on China for unfair trade practices, remain valid. These laws require formal investigations and Congressional involvement, unlike the emergency powers under IEEPA.
Significance for US Trade Policy and Executive Authority
The court decisions mark check on the executive branch’s unilateral use of emergency powers in trade matters. They reinforce the principle that broad economic measures must have clear legal backing and Congressional oversight. The rulings may influence future US trade policy and the balance of power between the President and Congress in economic governance.
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