President Donald Trump’s bold trade agenda just hit a brick wall with a federal appeals court ruling that could unravel years of tariff policies.
According to CNBC, on Friday, the U.S. Court of Appeals for the Federal Circuit delivered a stunning 7-4 decision, declaring most of Trump’s global tariffs, including the so-called “reciprocal” levies, illegal under the law he cited, marking a major setback for his trade strategy.
This isn’t the first defeat for Trump on this front; the case, known as V.O.S. Selections v. Trump, saw an earlier loss in late May 2025 when the U.S. Court of International Trade struck down his use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. That initial ruling targeted tariffs on countries like Canada, Mexico, and China over alleged fentanyl trafficking, as well as worldwide reciprocal tariffs. The Federal Circuit paused that lower court decision while Trump’s appeal played out, but the skepticism from multiple judges during July 2025 oral arguments hinted at the storm to come.
The appeals court didn’t mince words, ruling that Trump overstepped his authority under IEEPA with tariffs that lacked limits in scope, rate, or duration. “Both the Trafficking Tariffs and the Reciprocal Tariffs are unbounded in scope,” the majority opinion stated. Well, turns out even a president can’t rewrite the rulebook without Congress holding the pen.
The court pointed out these tariffs hit nearly every imported good, slapped on unpredictable, sky-high rates beyond the standard U.S. tariff system, and had no end date in sight. “Tariffs are a core Congressional power,” the ruling reminded us. Seems like a not-so-subtle nudge that some powers aren’t up for executive grabs.
Four dissenting judges pushed back, arguing the plaintiffs hadn’t fully made their case for such a sweeping judgment. But with 11 of the 12 Federal Circuit judges weighing in—minus Judge Pauline Newman, sidelined since 2023 over a separate dispute—the majority’s stance carried the day. A 7-4 split isn’t exactly a coin toss; it’s a clear signal of judicial unease.
Trump, never one to take a hit quietly, blasted the court as “Highly Partisan” and warned of dire consequences on Truth Social. “If these Tariffs ever went away, it would be a total disaster for the Country,” he posted. Disaster or not, painting judges as political pawns won’t change the gavel’s fall.
His administration isn’t throwing in the towel, with White House spokesman Kush Desai asserting, “The President’s tariffs remain in effect.” Desai added they’re gearing up for an “ultimate victory” in this fight. Optimism is nice, but the clock’s ticking until October 14, 2025, when the court’s pause on this ruling expires unless the Supreme Court steps in.
The administration’s defense hinges on IEEPA granting the president broad powers to slap tariffs during national emergencies. Commerce Secretary Howard Lutnick doubled down, warning that axing these tariffs “would cause massive and irreparable harm” to U.S. interests. Harm or not, the court seems to think unchecked power is the bigger threat.
This legal showdown, consolidated from lawsuits by a dozen states and five small businesses, is just the tip of the iceberg with over half a dozen federal challenges to Trump’s IEEPA tariffs still in play. This case, however, is the furthest along, making its outcome a potential bellwether. If this ruling sticks, it could domino through the rest of the challenges like a house of cards.
Plaintiffs’ attorneys are celebrating, with Jeffrey Schwab of the Liberty Justice Center noting, “This decision protects American businesses.” He called out Trump’s “Liberation Day” tariffs as unlawful for the second time in this saga. Cheers from the legal team, but small businesses caught in tariff crossfire might not feel like popping champagne just yet.
Co-counsel Neal Katyal chimed in, calling the ruling “a powerful reaffirmation of our nation’s core constitutional commitments.” High ideals aside, the practical fallout of dismantling these tariffs could be a messy unwinding of trade deals, as Lutnick warned. Principles are great until the bill comes due.
Hours before the ruling dropped, Trump’s trade negotiators scrambled, pointing to a Congressional Budget Office estimate that tariffs could slash U.S. deficits by $4 trillion over a decade. Desperate Hail Mary or solid data? Either way, the court wasn’t swayed by last-minute “supplemental developments.”
For now, the tariffs stand, thanks to the court’s pause until mid-October 2025, giving Trump’s team a narrow window to appeal to the Supreme Court.
The stakes couldn’t be higher—trade policy, national security, and executive power are all on the line. If this goes south, it’s not just a policy loss; it’s a blueprint for curbing presidential overreach.
