Trump's Tariffs Take a Hit: What's Next?

Tue Oct 21 2025 07:08:37 GMT+0300 (Eastern European Summer Time)

A recent federal court ruling has deemed most of Donald Trump's tariffs illegal, marking a significant challenge to his administration's trade policies. What does this mean for the economy and Trump's future?

A federal appeals court has ruled that most of Donald Trump's tariffs are illegally imposed under his emergency powers. The decision could lead to significant changes in U.S. trade policy and has immediate implications for the economy. The case is expected to head to the U.S. Supreme Court, which may decide whether the tariffs remain in place or are annulled. The ruling has sparked debates around economic impacts and the use of emergency powers.

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.

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.

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.

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.

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.

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.