A US federal appeals court ruled Trump exceeded his authority in imposing country-wide tariffs, including so-called ‘fentanyl tariffs’ on Canada. The decision will take effect on October 14, 2025, and will likely be appealed in the interim.
US President Donald Trump’s tariff agenda has suffered a significant defeat in court. In a 7-4 ruling, the U.S. Court of Appeals for the Federal Circuit upheld a decision by the U.S. Court of International Trade, which stated that Trump overstepped his authority when using the International Emergency Economic Powers Act to impose nationwide tariffs and ‘fentanyl tariffs’.
Here’s the key section of the ruling:
“We are not addressing whether the President’s actions should have been taken as a matter of policy. Nor are we deciding whether IEEPA authorizes any tariffs at all. Rather, the only issue we resolve on appeal is whether the Trafficking Tariffs and Reciprocal Tariffs imposed by the Challenged Executive Orders are authorized by IEEPA. We conclude they are not.”
In effect, Trump used emergency powers to impose a massive tax and weaken the economies of U.S. trading partners. The appeals court ruled that his use of those powers to impose tariffs was not lawful.
The decision takes effect on October 14th, and a flood of litigation is set to ensue. Countless businesses will sue for tariff relief, to which they are entitled. If the U.S. government loses its inevitable appeal to the U.S. Supreme Court, it will have to reimburse businesses that have been hit hard by Trump’s tariff tax.
Trump’s ‘deals’ with the European Union and Japan (which generally fall short of full trade agreements since significant differences remain on what was actually agreed upon) are also now in jeopardy. Those deals were based on the U.S. applying ‘reciprocal tariffs’ (that exceeded the rate other countries applied to the U.S. and were thus not reciprocal at all). If those tariffs are illegal, how can a deal be made based on those tariffs?
A win for Canada
Trump’s ‘fentanyl tariffs’ on Canada and others have also been ruled illegal. Trump was clearly using the issue of fentanyl as a pretext to impose tariffs he wanted to impose anyway. You’ll note that Trump finds any excuse he can to impose tariffs, and often shifts from one excuse to another. For example, he’s claimed tariffs on Canada were due to fentanyl, military spending, the trade deficit (which is actually a U.S. trade surplus aside from heavily discounted Canadian energy exported to the U.S., which benefits the U.S. economy), and more.
This is a win for Canada in three ways.
First, the government’s decision to avoid rushing to get a ‘deal’ while emphasizing tariff-free trade under CUSMA has been vindicated. Most of Trump’s tariffs are in legal limbo, and succumbing to short-term pressure to get a deal based on those tariffs would have been unwise.
Second, Trump’s leverage has been weakened. The rule of law still exists in the United States, and more and more American businesses and trade groups are pushing back against Trump’s efforts to unilaterally rewrite all of America’s trading relationships on a whim. The more constrained Trump is, the less credibility his endless threats have.
Third, the truth has managed to make a bit of a comeback. Trump has repeatedly lied about the scale of Canadian fentanyl at the border, lied about how trade deficits work, lied about the trade deficit itself, lied about CUSMA (he once praised it, yet now claims it’s unfair), and more. This court ruling is an important reminder that the truth still matters, and that benefits all U.S. trading partners, given how much Trump’s economically-damaging tariff agenda is built on dishonesty.
It is not a complete win, of course, given that tariffs on steel, aluminum, and autos remain in place since they were imposed under the Trade Expansion Act of 1962 and were not addressed in this ruling.
The implementation of this ruling is pending, and September will likely be consumed with a legal battle over tariffs that will culminate at the Supreme Court. And Trump will try to find other pretexts to impose tariffs.
Still, today was an important day for Canada, and for all those who value honesty, the rule of law, free trade, and respect for signed commitments to allies.
Spencer Fernando
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