"Emergency Powers Tariffs" Halted: Judicial Scrutiny on Trump's Tariff Policy, U.S. Court of Appeals Rules It Illegal

The U.S. Court of Appeals for the Federal Circuit (CAFC) has ruled that most of the Trump administration's "global tariffs" are illegal. The majority opinion was 7 to 4. The ruling clearly delineates that the president's imposition of broad tariffs based on the IEEPA (International Emergency Economic Powers Act) exceeds the scope of the law, and that the imposition of tariffs is fundamentally a congressional power. However, the tariffs will not be immediately invalidated and will remain in effect until October 14, allowing time for the administration to appeal to the Supreme Court.ReutersBloomberg.comThe Guardian

This decision follows the U.S. Court of International Trade (USCIT) ruling in May that declared IEEPA-based tariffs illegal. As a result of the stay granted in this appeal, current practices will continue for the time being, but the legal risk has been maximized. The background includes the administration's blanket tariffs announced as "Liberation Day" and emergency tariffs broadly targeting specific countries.AxiosAP News

However, not all tariffs were collectively deemed illegal. Tariffs based on the Trade Expansion Act Section 232, which are grounded in national security concerns, such as those on steel, aluminum, and automobiles, belong to a different legal framework and are not immediately affected, according to major reports. In the market and corporate sectors, the phase of sorting out "what stops and what remains" based on the text of the law has begun.AxiosReuters

The political impact is significant. President Trump condemned the ruling as a "disaster for the country" and hinted at a reversal in the Supreme Court. It has been reported that the Department of Justice also plans to appeal. Meanwhile, economic magazines and communications companies emphasize the majority opinion's narrow interpretation of the IEEPA's scope and its restriction on executive discretion.The Economic TimesStraight Arrow NewsTIME

The impact on businesses and households is twofold. In the short term, due to the "grace period of the ruling," the tariff system remains unchanged, limiting price and procurement disruptions. However, if the Supreme Court ultimately confirms the illegality, practical issues such as ① the possibility and scope of refunding already collected tariffs, ② renegotiation of contract price clauses (pass-through), and ③ reassessment of inventory valuation losses and currency hedges will emerge rapidly. Conversely, if the administration wins, the precedent of comprehensive tariffs using the IEEPA could be strengthened, potentially normalizing "tariff leverage" in trade negotiations.Bloomberg.comArgus Media

Internationally, counterparts of allied and major trading partner countries may reassess counter-tariffs or freeze negotiations. The ruling indicates strong judicial caution against the "generalization of emergency powers," providing countries with material to recalculate the "reversibility" of U.S. trade policy. Particularly, disputes involving the EU, Canada, Mexico, and China may require "re-realignment" depending on the Supreme Court's outcome.Reuters

Sentiment on Social Media: Divided Opinions

Among trade policy experts and think tank members, there is a prevalent narrative of welcoming the "curb on overreach." Free trade economist Scott Lincicome has expressed strong approval since the CIT's illegal ruling stage, summarizing the current appeal as "the judiciary setting clear limits on IEEPA tariffs." Historical economist Phil Magness also reported the victory, pointing out the risks of fiscal design dependent on tariff revenue.X (formerly Twitter)

On the other hand, from the administration and ruling party supporters, as well as protectionist positions, there is ongoing criticism that "the judiciary is stripping away legitimate tools to protect American industry." Trump himself has strongly opposed, emphasizing that "all tariffs remain in effect" pending Supreme Court hearings. California Governor Gavin Newsom and other opposition figures have reacted with sarcasm on social media, welcoming the ruling with comments like "illegal is illegal."Newsweek

Across media outlets, the core of the breaking news is the "7 to 4 majority opinion," "outside the scope of IEEPA," "effective until October 14," and "to the Supreme Court." Economic papers delve into the impact on corporate practices and inflation/consumption, while international sections explore the effects on retaliatory tariffs and negotiation schedules by various countries.ReutersBloomberg.comSky News

Corporate Practical Checklist

1. Inventory of Contract Clauses: Review of tariff pass-through clauses, conditions for invoking Hardship/Material Adverse Change, and reconfirmation of Incoterms.

2. Procurement Diversification and Inventory Design: Secure the potential for "swing" in inventory and suppliers, considering the possibility and timeline of tariff refunds.

3. Reassessment of Origin and HS Codes: Strictly delineate between IEEPA-derived tariffs and Section 232 tariffs.

4. Pricing Strategy: Use the hold period until mid-October to design the "launch point" for quarterly financial results and price revisions.AxiosArgus Media

Three Upcoming Divergence Points

• Supreme Court's Review and Criteria Setting: How to define the scope of IEEPA and where to draw the boundary with Congress's taxing power.TIME

• Content of Refund Risk: The scope, retroactive period, and administrative burden of refunds if illegality is confirmed. This could directly impact the cash flow of importers.Argus Media

• Diplomatic and Trade "Cold-Warm" Adjustments: The potential for counterpart countries' countermeasures or negotiation stances to soften or, conversely, harden.Reuters
  
  

References & Sources (Major Reports)

• Reuters "Most Trump tariffs are not legal, US appeals court rules", 2025/08/30 (Summary of the ruling and grace period).Reuters

• Bloomberg "Trump's Global Tariffs Found Illegal by US Appeals Court", 2025/08/29 (Scope of the case and practical impact).Bloomberg.com

• The Guardian (Breaking news and analysis, mention of October 14 implementation).The Guardian

• AP / Yahoo Finance Live Updates (Chronological overview).AP NewsYahoo! Finance

• CBS News / Sky News (Relation to lower court ruling).CBS NewsSky News

• Axios (Key points of "Section 232 is a separate framework" during the USCIT ruling).Axios

• Newsweek (Political reactions and mention of Trump's posts).Newsweek##HTML_TAG_