Appeals court invalidates many of Trump’s tariffs. Next stop: The Supreme Court.

A federal appeals court struck down most of President Trump’s Congress-averting global import tariffs Friday in a dispute that’s predicted to head to the US Supreme Court.

The 7-4 ruling, issued by 11 judges for the US Court of Appeals for the Federal Circuit in Washington, D.C., allows the tariffs to remain in place while the administration decides on an appeal to the US Supreme Court.

The decision upholds a ruling handed down in May by the US Court of International Trade (CIT), saying that the president lacked legal authority to order, by way of executive orders, a series of global tariffs imposed on US trading partners.

“We affirm the CIT’s holding that the trafficking and reciprocal tariffs imposed by the challenged executive orders exceed the authority delegated to the President,” the majority held in the ruling. “We also affirm the CIT’s grant of declaratory relief that the orders are ‘invalid as contrary to law.'”

At the center of the dispute is the scope of a national security-based law enacted in 1977 known as “IEEPA” — the International Emergency Economic Powers Act. The law authorizes the president to “regulate” international commerce after declaring a national emergency.

“In response to these declared emergencies, the President has departed from the established tariff schedules and imposed varying tariffs of unlimited duration on imports of nearly all goods from nearly every country with which the United States conducts trade,” the court said in its ruling.

In a post to his social media website Truth Social, the president said, “a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country.”

The court emphasized that under the US Constitution, Congress is empowered to lay and collect taxes, duties, imposts, and excises and to regulate commerce with foreign nations.

“Tariffs are a tax, and the framers of the Constitution expressly contemplated the exclusive grant of taxing power to the legislative branch,” the ruling said.

Read more: The latest news and updates on Trump’s tariffs

The court was tasked with deciding if IEEPA is among a handful of rare exceptions that extend limited taxing power to the president, a power otherwise exclusive to Congress.

Trump cited IEEPA when he declared two national emergencies — illegal immigration and flows of illegal drugs from overseas — as bases for the tariff orders.

Trump’s Justice Department Assistant Attorney General Brett Shumate argued in July before the appeals court that IEEPA could not limit president’s method of regulation, once the president declared an emergency. Congress would have understood that when it wrote the law, Shumate said, and Congress can step in to overrule the president’s tariffs.

Brian Simmonds Marshall, a lawyer for one of 12 states that joined the importers in their challenge opposing the tariffs, argued that the term “regulate” was meant to permit the president to order quotas that limit the number of imported goods — and potentially order import licensing requirements and fees.

“IEEPA doesn’t even say ‘tariffs.’ It doesn’t even mention it,” one judge said during the hearing in May.

“What does ‘regulation of importation’ mean?” another judge asked. And “If ‘regulate’ doesn’t cover tariffs, what does it cover?”

The appeals panel that issued Friday’s decision was composed of seven judges appointed by former Democratic presidents and four appointed by Republican presidents.

The judges looked to a Nixon-era lawsuit that addressed IEEPA’s predecessor law, known as the Trading with the Enemy Act (TWEA), which Trump’s team cited as proof that the president’s global tariffs should be allowed to stand in court.

Roughly five decades ago, President Nixon unilaterally imposed 10% duties on imports as part of a set of economic measures dubbed the “Nixon shock.” Those tariffs were challenged in court in much the same way as Trump’s 2025 tariffs have been.

A Japanese zipper-making business called Yoshida International sued, saying Nixon lacked the power to set the tariff under three different laws that the government cited as justification: the Tariff Act, the Trade Expansion Act, and the Trading with the Enemy Act (TWEA).

The most controversial justification was the TWEA.

A US Customs Court initially sided with the zipper importer, holding that none of the three laws offered adequate authority for the duty. Yet on appeal, Nixon’s tariffs were upheld.

The court that upheld the Nixon tariffs reasoned that “neither need nor national emergency” justified the levies because Congress had not delegated such power and because the authority was “not inherent” in his office. However, the court said, TWEA carved out enough power to regulate importation during an economic emergency.

Read more: What Trump’s tariffs mean for the economy and your wallet

One of the appeals court judges hearing the Trump case referenced the 1970s case and said, “It seems pretty clear to me that Yoshida is telling us that ‘No, the president doesn’t have the authority to rewrite the Tariff Schedule.’ In this case, that’s what the president is trying to do.”

A lawyer for the challengers to Trump’s duties argued that by adopting IEEPA in 1977, Congress ratified the high court’s holding in Yoshida, which he said allowed the president to impose “modest, bounded, temporary tariffs,” but did not sanction unbounded, permanent duties.

During the arguments before the appeals panel, the lawyers also sparred over whether the president’s declared national emergency met IEEPA’s requirements of “unusual” and “extraordinary.”

One judge agreed the president did meet these requirements by identifying underlying causes contributing to the threat, including trade deficits, tariff barriers, domestic production shortfalls, and a lack of reciprocity in US trading relationships.

“How does that not constitute what the president is expressly saying is an extraordinary threat?” the judge asked the challengers.

Another judge countered, “How can a trade deficit be an extraordinary and unusual threat when we’ve had trade deficits for decades?”

Lawyers for the administration argued that the deficit becomes extraordinary and unusual once it reaches a point where it threatens the resources that are foundational to US national security.

Other cases involving challenges to the IEEPA-based tariffs have been filed in multiple jurisdictions.

In a case set for arguments in the US Court of Appeals for the D.C. Circuit in September, two private, family-owned American toy companies, Learning Resources, Inc., and hand2mind, Inc., allege that IEEPA neither authorizes the president to impose tariffs nor authorizes the particular challenged tariffs. The companies also allege that the tariffs violate the Administrative Procedure Act.

A district court ruled in favor of the toy companies, which import goods from China, Taiwan, Korea, Vietnam, Thailand, and India.

In a rare legal filing, the toy companies asked the high court to grant certiorari before an anticipated judgment from the US Appeals Court for the DC Circuit.

“Whether the President has authority to impose tariffs … is of such imperative importance that it warrants review now,” the toy companies said. However, the high court declined to take up the case.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.

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