Trump tariffs face key test in US appeals court

A US appeals court will review on Thursday President Donald Trump’s authority to impose tariffs after a lower court said he exceeded his authority with sweeping tariffs on imported goods.

The U.S. Court of Appeals for the Federal Circuit in Washington will review the legality of the “reciprocal” tariffs that Trump imposed on a wide range of U.S. trading partners in April, as well as tariffs imposed in February against China, Canada and Mexico.

A panel of all active judges on the court, eight appointed by Democratic presidents and three appointed by former Republican presidents, will hear arguments, scheduled to begin at 10 a.m. Eastern time, in two cases brought by five small American businesses and 12 Democratic-led states in the United States.

The arguments – a day before Trump plans to increase tariff rates on imported goods from nearly all US trading partners – mark the first test before a US appeals court of the scope of his tariff powers. The president has made tariffs a central tool of his foreign policy, using them aggressively during his second term as leverage in trade negotiations and to counter what he calls unfair practices.

States and businesses challenging the tariffs argue that they are not permissible under the emergency presidential powers that Trump cites to justify them. They say the U.S. Constitution gives Congress, not the president, authority over tariffs and other taxes.

Trump claims broad authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), a 1977 law historically used to sanction enemies or freeze their assets. Trump is the first president to use it to impose tariffs.

Trump said the April tariffs were a response to persistent U.S. trade imbalances and declining U.S. manufacturing capacity.

He said tariffs on China, Canada and Mexico were appropriate because those countries were not doing enough to stop illegal fentanyl from crossing U.S. borders. The countries denied that claim.

A federal district court allowed the tariffs to remain in place while it reviews the administration’s appeal. The timing of the court’s decision is uncertain, and the losing party is likely to appeal quickly to the U.S. Supreme Court.

The case will not affect tariffs imposed under more traditional legal bases, such as duties on steel and aluminum imports.

Trump’s constant and occasional tariff threats have rattled financial markets and disrupted the ability of American companies to manage supply chains, production, staffing and pricing.