The Trump administration is taking its tariff fight to the highest court in the land after a federal appeals court ruled that its sweeping import duties lack constitutional authority. The stakes are enormous: roughly $107 billion in customs revenue collected between February and July 2025 could be on the line.
The US Court of Appeals for the Federal Circuit ruled 7-4 on August 29 that tariffs imposed under the International Emergency Economic Powers Act, known as IEEPA, are unconstitutional. The court said the president doesn’t have the legal right to impose tariffs on imports using an emergency powers law that Congress never intended for trade policy.
The legal math is not in the administration’s favor
Out of 15 judges across three separate federal courts who have weighed in on the question, 11 have ruled against the administration’s authority to impose tariffs under IEEPA.
The Federal Circuit’s decision is temporarily stayed until October 14, 2025. The Justice Department filed for expedited Supreme Court review on September 4, just days after the ruling dropped.
The tariff programs affected by the ruling include the administration’s “Reciprocal Tariffs” and “Trafficking and Immigration Tariffs” that have been directed at Canada, Mexico, and China.
How $107 billion became the number to watch
Between February and July 2025, the Trump administration collected approximately $107 billion in customs duties under its IEEPA-authorized tariff regime. The court’s ruling means those IEEPA-imposed tariffs may be eligible for reimbursement.
The IEEPA question at the heart of it all
IEEPA was signed into law in 1977. It gives the president broad authority to regulate economic transactions during national emergencies. The law has historically been used for sanctions, asset freezes, and financial restrictions against hostile nations or entities, not for setting tariff rates on imported goods.
The Trump administration’s argument is that trade imbalances and immigration constitute national emergencies that justify using IEEPA’s broad powers for tariff purposes. The majority of judges who have reviewed that argument disagree, finding that IEEPA does not contain explicit congressional authorization for imposing customs duties.
What this means for investors
If the Supreme Court declines to intervene before the October 14 stay expires, the tariffs would face immediate legal jeopardy.
