Federal Appeals Court Temporarily Reinstates Trump’s Global Tariffs Amid Legal Battle
On May 29, 2025, the United States Court of Appeals for the Federal Circuit issued an administrative stay, temporarily reinstating President Donald Trump’s sweeping global tariffs following a lower court’s ruling that deemed them unlawful. This development came just one day after the U.S. Court of International Trade (CIT) in New York blocked the tariffs, finding that Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) of 1977. The appeals court’s decision pauses the CIT’s injunction while it reviews the Trump administration’s appeal, allowing the tariffs to remain in effect for now. This legal back-and-forth underscores ongoing challenges to Trump’s aggressive trade agenda, which has roiled global markets and sparked multiple lawsuits.
Background on Trump’s Tariffs
Trump announced his “Liberation Day” tariffs on April 2, 2025, invoking IEEPA to declare persistent U.S. trade deficits and issues like fentanyl trafficking as national emergencies. The plan imposed a baseline 10% tariff on imports from most countries, with higher “reciprocal” rates—up to 84%—on nations with significant trade surpluses against the U.S., such as China (30%), Canada and Mexico (25% on certain goods), and others. Trump paused some higher rates for 90 days to facilitate negotiations but kept the 10% baseline in place. The administration argued these measures would generate revenue to offset tax cuts, protect American jobs, and force better trade deals, potentially raising trillions for the federal budget.
However, critics, including economists and business groups, warned that the tariffs would act as a tax on U.S. consumers and importers, fueling inflation and disrupting supply chains. Since implementation, companies have reported over $34 billion in lost sales and higher costs, according to Reuters analysis. Sector-specific tariffs on steel, aluminum, and autos—imposed under separate authorities like Section 232 of the Trade Expansion Act of 1962—remain unaffected by these rulings.
The CIT Ruling: Tariffs Deemed Unlawful
In a unanimous 49-page decision on May 28, 2025, a three-judge CIT panel (appointed by Presidents Ronald Reagan, Barack Obama, and Trump himself) ruled that Trump’s tariffs were “contrary to law.” The court held that IEEPA, designed for addressing “unusual and extraordinary threats” during genuine emergencies, does not grant the president “unbounded authority” to impose tariffs unilaterally. Key findings included:
- Constitutional Limits: The U.S. Constitution assigns Congress the power to regulate commerce and impose tariffs (Article I, Section 8). IEEPA cannot override this by allowing the executive branch to levy taxes without legislative approval.
- Misuse of IEEPA: The law permits economic sanctions or regulations in emergencies but not broad tariffs to address trade imbalances or indirect issues like drug trafficking. The court noted that Trump’s fentanyl-related tariffs on Canada, Mexico, and China “do not deal with the threats set forth” and instead serve as leverage, which exceeds IEEPA’s scope.
- Broad Impact: The ruling applied universally, not just to plaintiffs, invalidating all IEEPA-based tariff orders since January 2025. The administration was ordered to halt collections within 10 days and issue refund directives.
The decision stemmed from two consolidated cases:
- One filed by the Liberty Justice Center on behalf of five small businesses (e.g., a New York wine importer and a Virginia educational kit maker), arguing irreparable harm to supply chains and survival.
- Another by 12 Democratic-led states (led by Oregon AG Dan Rayfield and including Nevada’s Aaron Ford), claiming the tariffs were an unconstitutional “power grab” causing economic damage.
Plaintiffs hailed the ruling as a victory for the rule of law. Nevada AG Ford stated it was “a win for Nevadans’ pocketbooks,” estimating billions in avoided economic harm. Oregon’s Rayfield called the tariffs “unlawful, reckless, and economically devastating,” noting they inflated prices and burdened families.
Appeals Court Stay: Tariffs Back in Effect Temporarily
The Trump administration filed an immediate appeal and emergency motion for a stay, warning of a “foreign policy disaster” if enforced. On May 29, the Federal Circuit granted the administrative stay, reinstating the tariffs pending further review. Plaintiffs must respond by June 5, with the government replying by June 9. A separate D.C. district court ruling on May 29 also deemed the tariffs unlawful in a narrower case involving Illinois toy importers but paused enforcement for 14 days to allow appeal.
White House spokesperson Kush Desai criticized the CIT as “unelected judges” overstepping on a national emergency, insisting trade deficits have “decimated American communities.” Trump posted on Truth Social, questioning the judges’ motives and hoping for Supreme Court reversal, despite appointing one himself. Deputy Press Secretary Karoline Leavitt called it “judicial overreach,” while trade adviser Peter Navarro vowed to find alternative paths.
Reactions and Market Impact
- Markets: The CIT ruling initially boosted stocks (Dow futures up 1.2%, Nasdaq nearly 2%) and strengthened the U.S. dollar against major currencies, reflecting relief from tariff uncertainty. Asian and European markets also rose, with Brent crude climbing 1.25% to $65.71. However, the stay tempered gains, introducing volatility as investors eye prolonged litigation.
- Democrats and Critics: House Foreign Affairs Ranking Member Gregory Meeks praised it as blocking an “illegal abuse of executive power.” NY AG Letitia James highlighted risks of inflation and job losses.
- International Response: Canadian PM Mark Carney called it consistent with Canada’s view that the tariffs were unlawful. Hong Kong’s financial secretary said it might “bring President Trump to reason.” Trading partners like the EU and China expressed hope for de-escalation amid ongoing talks.
- Businesses: Importers like those represented by the Liberty Justice Center noted procedural relief but warned of survival threats if tariffs persist. Experts like Cato Institute’s Scott Lincicome called it an “immense relief” but uncertain on appeal.
At least five other lawsuits are pending, including from California and Native American groups.
Broader Implications and Next Steps
This saga highlights tensions between executive trade powers and congressional authority, potentially reshaping U.S. trade policy. If the appeals court upholds the CIT, tariffs could be permanently blocked, forcing refunds and derailing negotiations with 18+ countries. Trump could pivot to alternatives:
- Section 122 of the Trade Act of 1974: Up to 15% tariffs for 150 days on deficit nations.
- Section 301 of the Trade Act of 1930: Up to 50% on discriminatory practices, requiring investigations.
- Other Laws: National security-based tariffs under Section 232 remain viable but slower.
Analysts at Goldman Sachs predict Trump will explore these, noting the ruling as a “setback” but not the end. The case could reach the Supreme Court, prolonging uncertainty into 2026. Economists like Capital Economics’ Paul Ashworth warn of disrupted talks, while High Frequency Economics’ Carl Weinberg sees it as adding “dust in the air” for businesses. As of August 30, 2025, the tariffs remain in limbo, with no final resolution, but the appeals process continues to fuel debates on America’s “America First” strategy.