Trump’s trade tariffs face key legal test in US court

Donald Trump’s sweeping tariff policy is reportedly now under judicial scrutiny. A federal appeals court case could redefine the limits of presidential power over trade, just as Trump doubles down on fresh import duties. According to a CNN Business report, a group of five small business owners and 12 Democratic-led states are challenging Trump’s use of the International Emergency Economic Powers Act (IEEPA) to justify wide-ranging tariffs. They argue that the 1977 law, designed for genuine national emergencies, doesn’t legally permit the imposition of customs duties.

This case could have a significant impact on the legal framework supporting Trump’s recent tariff blitz, including the 10 per cent universal import duties introduced in April, and the steep 50 per cent tariffs now targeting exports from countries like Brazil.

The courtroom clash

Oral arguments began Thursday at the US Court of Appeals for the Federal Circuit. The legal challenge follows a prior ruling from the US Court of International Trade that sided with the plaintiffs but allowed the contested tariffs to remain in place pending appeal. Assistant Attorney General Brett Shumate defended the Trump administration’s position, but as per CNN Business, at least 10 of the 11 judges expressed scepticism over the legality of using IEEPA to justify tariff actions.

Judge Jimmie Reyna pointedly asked, “But IEEPA has been rarely used, hasn’t it? It’s been over 50 years since it’s been used?” He further noted, “IEEPA doesn’t even say tariffs, doesn’t even mention them.” Another judge, Raymond Chen, challenged the claim that the US trade deficit constitutes an “extraordinary and unusual threat” that would justify emergency powers, asking: “Can the trade deficit be an extraordinary and unusual threat when we have had trade deficits for decades?”

Why it matters?

Trump has been relying on IEEPA to push a new wave of tariffs targeting China, Mexico, Canada, and most recently Brazil. On Wednesday, the former president used the law to hike tariffs on Brazilian exports by 40 percentage points — from 10 per cent to 50 per cent — citing an economic emergency. Even allies like Japan and the European Union, who signed fresh trade deals with Trump earlier this year are now facing higher tariffs under IEEPA provisions. If the court rules against Trump, the legal foundation of these deals could crumble.

JPMorgan analysts warned in a note, “If the IEEPA is deemed inadmissible, the legal status of the trade deals themselves could come into question.," as quoted by CNN Business.

What’s not at stake?

Even if Trump loses this legal battle, it doesn’t mean his tariff machine will grind to a halt.

In fact, the former president has also been using other legislative tools, including Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, to impose targeted duties. For example, Trump used Section 232 to justify a 50 per cent copper tariff this year on national security grounds, which requires a government probe before implementation.

Section 301, meanwhile, was the basis for many of Trump’s original tariffs against China and Europe during his first term. Unlike IEEPA-based tariffs, these mechanisms are not being challenged in court.

What comes next?

The appeals court could take weeks, even months to reach a decision. The case may eventually land in the US Supreme Court, introducing more uncertainty into Trump’s trade strategy, even as he continues to threaten new levies unless global partners agree to renegotiated deals.

Whether this legal challenge stops him or not, one thing is clear: Trump’s reliance on economic emergencies to justify tariffs is under more scrutiny than ever before.

(With inputs from the agencies)