In a dramatic legal setback, a U.S. federal appeals court has declared that many of former President Trump’s sweeping tariffs are unlawful. The court ruled that Trump overstepped his authority by invoking the 1977 International Emergency Economic Powers Act (IEEPA) to unilaterally impose broad tariffs under the guise of national emergencies. The court reaffirmed that tariffs must be authorized by Congress and IEEPA doesn't suffice for such sweeping economic intervention.

Although labelled "illegal," the tariffs remain in place for now, thanks to a temporary reprieve allowing the administration until October 14 to appeal to the Supreme Court. While this buy-time keeps tariffs active, uncertainty looms, with significant consequences ahead.

If the ruling stands, a staggering $159 billion in tariff revenue may need to be refunded potentially triggering a “financial ruin” crisis for federal coffers. Justice Department officials have warned that school funding, Social Security, and Medicare could face severe cuts under such strain.

Beyond fiscal woes, Trump's trade leverage could diminish. Tariffs have been his favoured tool in bilateral negotiations with key economic partners like the EU, Japan, and the UK. Without them, U.S. negotiating strength could falter, inviting reluctance or even renegotiation from foreign counterparts.

The ruling also raises a formidable constitutional question how far can an executive act without congressional mandate? Legal scholars and critics see it as an important moment to weaken uncontrolled presidential powers through emergency announcements.

Trump has promised to continue the fight, appealing against the decision and defending his use of IEEPA. But even if it is restored, the dispute reflects the increasing doubt of the judiciary and the restlessness of the legislature that is associated with the risks of unilateral economic administration - and this can give a new look to the American trade policy and the future of the executive powers.