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The Federal Circuit Court of Appeals backed a lower court’s decision to strike down President Trump’s International Emergency Economic Powers Act (IEEPA) tariffs, which means the case will likely proceed to the Supreme Court.

• In a 7-4 decision, the appeals court affirmed a decision by the Court of International Trade that IEEPA does not authorize the sweeping, global “Reciprocal” Tariffs that President Trump announced on April 2, along with the Trafficking (fentanyl) Tariffs.

The ruling: The Federal Circuit Court of Appeals focused on the separation of powers and the text of the IEEPA, without addressing the validity of the “national emergency” that President Trump declared as the reason for the tariffs.

• The IEEPA outlines several actions the president can take in response to a declared national emergency—“but none of these actions explicitly include the power to impose tariffs,” the court ruled.
• The court did not decide whether IEEPA authorizes any tariffs at all but agrees with the CIT that the “IEEPA’s grant of presidential authority to ‘regulate’ imports does not authorize the tariffs imposed by the Executive Orders” being challenged.

“Tariffs are a tax”: The opinion begins by underscoring that the power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution.

• The president can be granted delegated authority by Congress to negotiate lower or higher U.S. tariffs, but amendments to the tariff schedule are a matter of law.
• “When Congress delegates this power in the first instance, it does so clearly and unambiguously.”

Limitations when Congress delegates: The court also discussed statutes in which Congress did delegate to the president the power to impose tariffs, noting first that the IEEPA does not include the words “tariffs” or “duties” or any related words.

• In all cases when Congress did delegate these powers to the president, it always set “well-defined procedural and substantive limitations”—which means that the IEEPA was “unlikely” to have been intended as a blanket grant of “unlimited authority,” the judges wrote.

What’s next: The court issued a separate order stating that its decision will go into effect on Oct. 14, leaving the administration time to appeal to the Supreme Court, which may not issue a final decision until June 2026.

• In the meantime, the challenged tariffs will continue to be collected.

A related recap: In case you missed it, the European Union and U.S. announced a framework for a trade deal in late August, which could lead to zero duties on U.S. industrial exports to Europe.

• Meanwhile, the U.S. commits to cap tariffs on imports from the EU at the U.S. most-favored-nation tariff rate or 15%, whichever is higher.
• The framework announced some provisions for Section 232 tariffs, including that Section 232 tariffs will not apply to EU imports of autos or auto parts that have an MFN rate higher than 15%. Section 232 tariff rates for other products, including pharmaceuticals and semiconductors, have not been announced yet.

Looking ahead: The European Commission has advanced legislation to drop tariffs on U.S. industrial goods, and the European Parliament and Council of the EU must approve the proposal under the ordinary legislative procedure before these reductions can take effect.