After court defeat, Trump warns of economic chaos from loss of tariffs

Rethinking America
By Editor_1
President Donald Trump delivers remarks in the Oval Office of the White House in Washington, Aug. 6, 2025. The president and his advisers have suggested they will fight a court ruling that found many of the administration’s tariffs to be illegal -Doug Mills/The New York Times

By Tony Romm and Ana Swanson

WASHINGTON — President Donald Trump spent the weekend decrying a court decision that invalidated his most punishing global tariffs, and suggested he would soon take his fight to tax imports to the Supreme Court.

Trump and his top aides directed their ire toward a panel of appellate judges for its decision, issued late Friday (August 29), which found that the president had overstepped his authority by using a 1970s law to slap tariffs on nearly every major US trading partner.

Trump has maintained that any erosion in his ability to impose levies using the International Emergency Economic Powers Act will inflict damage on the United States by robbing it of both revenue and leverage.

“Without Tariffs, and all of the TRILLIONS OF DOLLARS we have already taken in, our Country would be completely destroyed, and our military power would be instantly obliterated,” Trump wrote in a social media post Sunday (August 31).

While the federal appeals court Friday ruled against the administration, it left Trump’s sweeping tariffs in place until Oct. 14, allowing the White House time to appeal the case to the Supreme Court.

It is unclear how fast the administration might do so. It also remains unknown whether the Supreme Court would agree to hear the appeal and, if it did, how it might decide the case.

A loss at the Supreme Court related to the emergency powers would severely undercut Trump’s hand when it comes to imposing tariffs. It could also undermine the centrepiece of his economic strategy to force companies to invest in the United States.

While Trump has other tariff tools at his disposal, they are more limited than the emergency powers that he has invoked to impose levies of between 10% and 50% on countries around the world. A loss at the Supreme Court could also force the administration to pay back billions of dollars in revenue that Trump has bragged about collecting so far this year with his new duties.

A spokesperson for the White House did not respond to a request for comment.

On Friday, the US Court of Appeals for the Federal Circuit ruled 7-4 against Trump and his use of the International Emergency Economic Powers Act, finding that it was unlikely that Congress had intended to grant the president nearly unlimited authority to impose tariffs as part of that law.

The statute, which primarily allows the president to impose sanctions, does not specifically mention tariffs. But Trump has invoked it repeatedly to issue withering global duties, most recently in an executive order imposing taxes on imports from about 90 countries in early August. Trump also used the law in the first months of his presidency to impose tariffs on China, Canada and Mexico, actions that he said were in response to those nations’ role in the fentanyl trade.

Angela M. Santos, a partner at the law firm ArentFox Schiff, said the ruling was “great news for importers,” and might give them some hope that they could be refunded for the tariffs they had already paid to the government. However, she added, “This dispute is far from over, the decision might be limited in scope, and importers may not see relief for some time”.

The adverse ruling on Friday was the second such legal defeat for the administration. In May, a lower trade court similarly found that Trump did not have “unbounded authority” under the 1970s law known as IEEPA, a decision that the administration appealed.

Even before the ruling, the administration had said it would appeal a loss to the Supreme Court. Trump and his advisers appeared to confirm those intentions in initial statements, lashing out against the judiciary.

Trump, late on Friday, attacked the appeals court on social media as “Highly Partisan,” and said he sought to preserve his tariffs with the “help of the United States Supreme Court”.

On Sunday, the president said that trillions of dollars of announced investment in the United States would be at risk if the tariffs were overruled.

“If a Radical Left Court is allowed to terminate these Tariffs, almost all of this investment, and much more, will be immediately cancelled!” he wrote. “In many ways, we would become a Third World Nation, with no hope of GREATNESS again.”

Peter Navarro, a trade adviser to the president, on Sunday described the decision as “weaponized partisan injustice at its worst.” Navarro, speaking on Fox News, asserted that a loss at the Supreme Court would be the “end of the United States”.

Trade experts have said that a loss at the Supreme Court could force the US government to pay back some of the billions of dollars it has collected in tariffs, creating a significant burden for the United States and more uncertainty for companies struggling to keep up with changing trade terms.

Trump’s top aides have said that a loss could also lead to a diplomatic embarrassment. In statements published hours before the ruling, Trump’s advisers raised particular concern about the trade deals the president had brokered with the European Union and other nations. Those agreements are based on tariffs imposed under the Emergency Powers Act.

Howard Lutnick, the Secretary of Commerce, said that a ruling against the administration could “lead to retaliation and the unwinding of agreed-upon deals by foreign-trading partners, and derail critical ongoing negotiations with foreign-trading partners.”

Some of America’s largest trading partners have indicated that they will not be beholden to what the United States decides.

“Tearing up a deal because of a US court ruling would be rubbing salt in Trump’s wound and risk triggering backlash, and not just on trade,” Mujtaba Rahman, who leads European research for the political risk consultancy Eurasia Group, said in an email. He said European leaders would probably look to leverage the deal by saying, “‘Look, we’ll stick with the deal, but you too implement it, and no monkey business with digital regulations and taxes.’”

Carsten Brzeski at ING in Germany said that US court decisions had too often “been challenged or overruled.” “The EU will be very cautious in reacting to it; at least in public,” he said.

Trump does have other powers at his disposal, but each comes with drawbacks. Statutes such as Section 232 of the Trade Expansion Act of 1962 typically require consultations and investigations that can take several months to carry out. That would prevent the president from arbitrarily raising and lowering tariffs.

Trump has repeatedly used Section 232 to impose tariffs on specific products on national security grounds, including foreign steel and automobiles. Those duties were unaffected by the court ruling on Friday. The president is exploring taxes on imported pharmaceuticals, semiconductors and other products under the Section 232 authority.

Other trade laws allow the president to issue sweeping tariffs, but only 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% globally for up to 150 days. Another provision of that law, Section 301, allows the president to issue broad tariffs in response to unfair trading practices, after first carrying out consultations and an investigation.

-New York Times

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