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US appeals court rules Trump's global tariffs are largely illegal

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US appeals court rules Trump's global tariffs are largely illegal

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New update 2025.09.01 08:51
US appeals court rules Trump's global tariffs are largely illegal

update 2025.09.01 08:51

On Friday, the US Court of Appeals for the Federal Circuit upheld a ruling that the sweeping tariffs the US President Donald Trump unilaterally imposed on most other countries were illegal, CNN reported. 

The decision impacts Trump's so-called "reciprocal" tariffs on most nations around the world, as well as additional levies placed on China, Mexico, and Canada. In a 7-4 decision, a Federal Appeals Court rejected Trump's argument that the tariffs  were authorized by an emergency economic powers legislation, declaring them "invalid as contrary to law."

Market reaction

At the time of press, the US Dollar Index (DXY) was up 0.07% on the day at 97.85. 

Tariffs FAQs

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Date

Created

 : 2025.09.01

Update

Last updated

 : 2025.09.01

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