Associated Press Economics Writer Paul Wiseman
WASHINGTON (AP) — President Donald Trump is on the verge of trade, bringing together the European Union, Japan and other partners to embrace previously unthinkable high taxes on exports to the US.
However, he has not been challenged, as he has bypassed Congress to slam large tariffs on most of the world’s economy. He faces at least seven lawsuits accusing him of stepping over his authority. The plaintiff wants to abandon his biggest and most audacious tariff.
And they won round one.
In May, a three-judicator panel from the US International Trade Court, a professional federal court in New York, ruled that Trump exceeded his authority when he declared a state of emergency on a smear tax (customer duties) on imports from almost every country in the world. The court combined two challenges (one x five businesses and one US state) into a single case in reaching that decision.
Now it goes to round two.
On Thursday, 11 judges from the Federal Circuit Court of Appeals in Washington, which typically specializes in patent law, are scheduled to hear oral debate from the Trump administration and states and businesses that want his sweeping import taxes to be cancelled.
The court previously allowed the federal government to continue collecting Trump tariffs as lawsuits progress through the judicial system.
The issue is very heavy – including the president’s power to bypass Congress and impose taxes that have a major economic impact in the US and abroad – it is widely expected to reach the US Supreme Court regardless of what the Court of Appeal decides.
Trump is an embarrassing fan of tariffs. He sees import taxes as a comprehensive economic tool that can bring manufacturing back to the US, protect American industry, and raise revenues to pay for the massive tax cuts of his “one big beautiful bill.”
The US Constitution gives Congress the power to impose taxes, including tariffs. However, lawmakers gradually abandoned their power over trade policies to the White House. According to Yale University’s Budget Institute, Trump made the most of his electricity vacuum and raised the average US tariff since 1934 to over 18%.
The issue in pending trials is the use of the International Emergency Economic Force Act of 1977 (IEEPA) to impose drastic tariffs without seeking parliamentary approval or investigating it. Instead, he insisted on his power to declare a national emergency justifying his import tax.
In February he cited the illegal flow of drugs and immigration across the US border to slap tariffs in Canada, China and Mexico. Then on April 2nd – “Liberation Day,” Trump called it. He called Ieepa to announce “mutual” tariffs in countries where the US operates the trade deficit, and the emergency he quoted was a long-term US trade shortage.
Trump later suspended mutual tariffs, but they remain a threat. They can again impose countries that do not preempt them by reaching a trade deal with the US on Friday.
The plaintiffs argue that the Emergency Power Act does not allow the use of customs duties. They also note that the trade deficit rarely meets the definition of “anomalous and extraordinary” threat that justifies declaring a state of emergency under the law. After all, the US runs a trade deficit.
The Trump administration argues that the court approved President Richard Nixon’s emergency use of tariffs during the 1971 economic crisis. The Nixon administration successfully cited its authority under a deal with the enemy in 1917.
In May, the Trade Court rejected the argument, stating that under the Emergency Act, the tariffs on the day of Trump’s release “over the authorities granted to the president.”
“The president cannot use free grants of authority to do what he wants,” said Riley Stevens, a senior adviser at the Liberty Justice Center, a libertarian legal group representing businesses suing Trump administration over tariffs.
In the case of drug trafficking and immigration tariffs in Canada, China and Mexico, the Trade Court ruled that the taxation did not meet Yepa’s requirement that it “measures the issues that were to be addressed.”
The court’s challenge does not cover other Trump tariffs, including the collection of foreign steel, aluminum and automobiles, imposed by the president after the Commerce Department’s investigation.
It also doesn’t include the tariffs Trump imposed on China in his first term — and President Joe Biden concluded after the government’s investigation was over, that Chinese people used unfair practices to give their own tech companies an edge over their rivals from the US and other Western countries.
Original issue: July 31, 2025 7:43am EDT
