A federal appeals court ruled on Friday that many of President Trump’s most punishing tariffs were illegal, delivering a major new setback that may severely undercut the administration’s primary power and source of leverage in an expanding global trade war.
The ruling, from the U.S. Court of Appeals for the Federal Circuit, affirmed a lower court’s initial finding that Mr. Trump did not possess unlimited authority to impose taxes on nearly all U.S. imports. But the appellate judges delayed the enforcement of their order until mid-October, allowing the administration time to appeal the case to the Supreme Court.
While the tariffs remain in place, for now, the adverse ruling still cast doubt over the centerpiece of Mr. Trump’s trade strategy and the many sweeping and sometimes withering tariffs that the president has imposed to raise revenue and broker favorable trade deals globally.
The president has warned that any erosion in his tariff powers could carry grave consequences. Mr. Trump, who has said his tariffs will make America “rich” through new sources of revenue, has even invoked the specter of the Great Depression if his ability to impose levies is curtailed and the country is forced to pay back some of the billions of dollars it has collected so far.
“Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end,” Mr. Trump predicted on social media. “If these Tariffs ever went away, it would be a total disaster for the Country.”
The Trump administration has no guarantee of success at the Supreme Court, where the president’s claims to vast tariff powers may face an uphill fight. Many leading conservative and libertarian lawyers and scholars have said the president’s duties were issued illegally.
At the heart of the fight is the extent to which Mr. Trump may invoke a decades-old economic emergency law to issue harsh tariffs on the nation’s foremost trading partners. The law does not mention tariffs, but the president has seized on the statute anyway, aiming to remake U.S. trade relationships and raise billions of dollars in revenue without having to obtain congressional support.
The law, known as the International Emergency Economic Powers Act, or IEEPA, is central to Mr. Trump’s trade strategy. Without it, he would be severely limited in the duties he could apply, and the duration that they could be imposed.
Mr. Trump’s claims of seemingly unlimited trade power immediately drew legal challenges from small businesses and states, which said they were harmed financially by taxes on foreign goods that the president had no right to issue. In May, a federal trade court agreed, invalidating many of the president’s duties on grounds that the law did not grant him “unbounded authority” to wage his global trade war.
The Trump administration quickly appealed, and the court at first allowed the president to maintain his tariffs while the judges considered the legality of Mr. Trump’s actions. That opened the door for the White House to expand its use of tariffs this month — with a new slate of duties targeting more than 90 countries — even before appellate judges could rule.
“The president cannot lawfully impose tariffs on his own, and IEEPA does not give him unlimited unilateral tariff authority,” said Jeffrey Schwab, the director of litigation at the Liberty Justice Center, which represented small businesses that brought one of the lawsuits. “This decision protects American businesses and consumers from the uncertainty and harm caused by these unlawful tariffs.”
The ruling implicates a vast set of tariffs that date back to the beginning of Mr. Trump’s presidency, including some of his toughest duties on China, Canada and Mexico. He justified them by pointing to an evolving set of emergencies — from persistent trade deficits to the flow of fentanyl into the United States.
Mr. Trump also invoked economic emergency powers to enact tariffs — totaling as high as 50 percent — on dozens of additional countries beginning this month, a reprisal of the so-called reciprocal rates that he first announced on what he described as Liberation Day.
No president before Mr. Trump had invoked the economic emergency law to tax imports. During Mr. Trump’s first term, his advisers had questions about whether IEEPA, which is typically used to issue foreign sanctions, could be used to levy broad tariffs at all.
In his return to the White House, however, Mr. Trump and his advisers took a more expansive interpretation, concluding that an economic emergency could be declared based on a wide variety of reasons. And they came to see IEEPA as a tool that would enable them to “move quickly,” said Ted Murphy, an international trade expert at Sidley Austin, a law firm in Washington.
“The president can do lots of things in the trade space,” he said. “The fundamental part of this decision is reminding everyone that the power to assess tariffs was bestowed by the Constitution to Congress.”
Without it, the White House could still issue tariffs, but they would be severely limited in their scope and duration. That includes the “Section 232” tariffs related to national security that Mr. Trump has imposed on cars and steel, as well as other trade laws that allow him to issue more sweeping tariffs for a limited period of time. Section 122 of the Trade Act of 1974, for example, allows a president to impose duties of up to 15 percent globally for up to 150 days, and could be used as a temporary measure.
The court ruling does not affect the specific rates that the president has applied to foreign vehicles, steel and other goods, which Mr. Trump imposed under a separate law that allows him to tax imports on national security grounds.
Ana Swanson contributed reporting.
Tony Romm is a reporter covering economic policy and the Trump administration for The Times, based in Washington.
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