The US Federal Court of Appeals ruled recently that most of the tariffs imposed by US President Donald Trump as part of the trade wars are unlawful. However, the court decided that, for the time being, these tariffs will remain in effect. This is a landmark decision with potentially wide-ranging implications for the US and global economies, as well as for the balance of powers within the US federal government.
The International Emergency Economic Powers Act and the Federal Ruling
The ruling focuses on the administration’s use of the International Emergency Economic Powers Act (IEEPA) of 1977, which grants the President broad authority to impose sanctions during emergencies, including asset freezes, restrictions on financial transactions, and trade embargoes. The tariffs at issue, effective since August, range from 10% to 55% on imports from multiple US trading partners. Trump justified the tariffs as a means to benefit the domestic economy, on the assumption that higher import costs would increase demand for domestic products.
The court concluded the President does not have authority under the IEEPA to impose tariffs or taxes. Because the US Constitution grants Congress that exclusive power, the judges determined Trump had exceeded his authority. They further emphasized that no previous president had used the emergency powers law to impose import tariffs.
Trump Tariffs Remain in Effect Until October 2025
Practically, the decision’s immediate impact is limited. Despite the resounding ruling, the court allowed the tariffs to remain in effect until mid-October 2025, pending ongoing litigation and to provide the administration an opportunity to appeal to the Supreme Court. The ruling also does not affect all government measures. For instance, tariffs on steel and aluminum imposed under different legislation remain in force. Tariffs specifically on imports from China, Canada, and Mexico—including those related to alleged inaction on the flow of fentanyl into the US—were ruled unlawful, as were Trump’s so-called “retaliatory tariffs” imposed during the trade war. The US Department of Justice has announced it will appeal the decision.
Implications: Regulatory Uncertainty and Strategic Business Challenges
The ruling’s significance extends beyond the immediate question of Trump-era tariffs. On the one hand, it reinforces the principle of separation of powers in the US, establishing clear limits on presidential authority in economic policy. On the other hand, the resulting regulatory uncertainty presents substantial challenges for businesses and investors, who must plan commercial strategies and supply chains under ambiguous trade conditions. While the US government may still impose tariffs under other statutory mechanisms, these are more limited than the IEEPA authority.
At this stage, companies operating internationally—particularly Israeli firms—should closely monitor these legal and political developments, as they have immediate and direct effects on business operations. Future rulings by higher courts could fundamentally reshape US trade policy and directly impact import, export, and risk management strategies across industries.
