Washington: A federal appeals court in the US has ruled that President Donald Trump’s global tariffs, including the 50% duties imposed on India, were illegally applied, dealing a major blow to the administration’s trade strategy while casting uncertainty over trillions of dollars in global commerce.
The US Court of Appeals for the Federal Circuit — roughly an equivalent of a high court in India — ruled 7-4 on Friday that Trump exceeded his authority by invoking a 1970s-era emergency law to impose the sweeping tariff regime, upholding an earlier decision by the Court of International Trade.
However, the landmark ruling will not take immediate effect, with the court setting October 14 as the deadline before any changes occur. This provides the Trump administration time to challenge the decision in the Supreme Court, which is widely expected.
The ruling specifically affects Trump’s “reciprocal tariffs” that took effect August 7 and August 28, including the punitive duties on India. Imports from India into the US currently face a 50% tariff rate, comprising a 25% reciprocal tariff and an additional 25% penalty for purchasing Russian energy.
The decision also casts doubt over Trump’s tariff reduction deals with Japan, the European Union, the United Kingdom and South Korea, while affecting penalties imposed on Canada and Mexico over alleged failures to counter cross-border drug trade.
The baseline 10% tariff imposed on all goods entering the United States since Trump’s April 2 “Liberation Day” is similarly affected by the ruling.
The Federal Circuit found that while the International Emergency Economic Powers Act (IEEPA) grants the president authority to deal with national economic emergencies, it does not explicitly provide power to impose tariffs and duties—a prerogative that generally lies with Congress.
The Trump administration had invoked the rarely used emergency law by claiming that large global trade deficits and an unchecked cross-border drug epidemic constituted a national economic emergency.
Fearing the court might invalidate tariffs immediately, the administration filed urgent statements by treasury secretary Scott Bessent, commerce secretary Howard Lutnick and secretary of state Marco Rubio warning of “dire foreign-policy consequences,” according to Bloomberg.
Bessent specifically warned the ruling would lead to “dangerous diplomatic embarrassment” for the United States. Trump responded defiantly on his Truth Social platform, calling the Federal Circuit a “highly partisan” court while noting the tariffs remained in place. “If allowed to stand, this decision would literally destroy the United States of America,” Trump posted.
Experts said that the balance between presidential authority and Congressional powers was at the centre of the ruling. “The Constitution grants Congress—not the president—the authority to impose tariffs and taxes. By declaring a trade deficit a “national emergency” in April and linking fentanyl inflows to tariffs on China, Canada, and Mexico in February, Trump sought to stretch IEEPA beyond its intended scope,” said Ajay Srivastava of think tank Global Trade Research Initiative.
Alternative legal pathways
Beyond appealing the ruling, Trump retains alternative legal authorities for imposing import taxes, though they would significantly limit the speed and severity of his actions.
The trade court noted in its May decision that Trump retains more limited power to impose tariffs under the Trade Act of 1974 to address trade deficits. However, that law restricts tariffs to 15% and limits them to just 150 days for countries with which the US runs large trade deficits—far below the current 50% rate on India.
The administration could also invoke levies under Section 232 of the Trade Expansion Act of 1962, as it did with tariffs on foreign steel, aluminium and automobiles. But that authority requires a commerce department investigation and cannot be imposed at the president’s discretion, potentially taking months to implement.
The appeals court cited a Supreme Court ruling on universal injunctions in sending the case back to the lower Court of International Trade, which must now determine whether its ruling applies universally or only to the specific parties involved in the challenge. This procedural step could delay the case’s path to the Supreme Court, though the administration retains the option to appeal directly to the higher court, which has largely backed Trump on other matters. The White House could also allow the Court of International Trade to revisit the matter first.
Global implications
The legal challenge was led by a coalition of small businesses and Democratic-led states arguing that trade deficits are a persistent feature of the US economy rather than an emergency, and that fentanyl-related tariffs represent negotiating tactics rather than legitimate drug interdiction efforts.
A final ruling striking down the tariffs would upend Trump’s trade strategy and potentially force the administration to refund tariffs already collected, affecting trillions of dollars in global commerce.
Democratic Representative Gregory Meeks, who leads the House Foreign Affairs Committee, used the ruling to call for congressional consideration of his resolution to end the tariffs. Meeks has repeatedly criticised the administration’s 50% tariff on India. The ruling comes as India and the United States have suspended formal trade negotiations, with New Delhi hoping to resume talks once the tariff dispute is resolved. The sixth round of negotiations, scheduled for August 25 in New Delhi, were postponed following the imposition of punitive duties.
