A U.S. appeals court has temporarily stayed a decision by the U.S. Court of International Trade (CIT) that declared former President Donald Trump’s sweeping “Liberation Day” tariffs unconstitutional. On May 29, 2025, the three-judge panel of the Federal Circuit granted the federal government’s request for an immediate pause, allowing the contested duties to remain in effect while the case moves through the appellate process .
Last week, the CIT had ruled that Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA) when he imposed blanket 10 percent tariffs on virtually all imports—and higher rates on China, Mexico, and Canada—without Congressional approval . The lower court held that the Constitution vests tariff-setting power exclusively in Congress, with only narrow delegations permitted.
Constitutional Authority Under Scrutiny
Professor Justin Wolfers of the University of Michigan, an expert in economics and public policy, underscored the constitutional issue: “The Constitution gives the power over tariffs to Congress, not the White House. Over the years, Congress has handed off limited authority, but a simple reading of the rules says the president can’t impose across-the-board tariffs on every country in the world” . Trump’s administration had attempted to justify the measures by invoking emergency powers, declaring a national emergency to invoke IEEPA—an act critics argue makes no reference to tariffs and is reserved for genuine crises.
A separate district court injunction this week similarly found the tariffs unconstitutional, prompting government lawyers to move swiftly to the appeals court. The Federal Circuit has set deadlines: plaintiffs—primarily small businesses—must respond by June 5, and the government’s reply is due by June 9. The panel has not indicated when oral arguments or a decision will follow.
Market Reaction: From Volatility to Composure
Financial markets, which initially plunged on the tariff announcement in early April and soared when Trump paused them, have exhibited remarkably muted responses to the recent court developments. According to Professor Wolfers, two interpretations exist: either markets now view tariffs as fundamentally integral to corporate profitability—reacting only modestly to legal setbacks—or investors have concluded that the White House’s trade policy is so erratic and legally vulnerable that court skirmishes exert only limited additional shock .
Supporting the latter view, Andrew Lilley, Chief Interest Rate Strategist at Barrenjoey, noted, “Global leaders and markets are waking up to a different version of Trump this term—bolder, more unpredictable, and less constrained by conventional checks and balances” . Initial market gyrations of 2025 reflected not only the tariff rates themselves but broader concerns about governance and economic coherence.
The Path to the Supreme Court
Should the Federal Circuit ultimately rule against the administration, the battle is poised to escalate to the Supreme Court. Given the major constitutional question at stake—whether a president may unilaterally impose broad tariffs via emergency declarations—the case could reshape executive authority over trade policy. Legal observers expect the White House to pursue every available avenue, including claims of implied delegation and national security prerogatives under the Trade Expansion Act of 1962.
READ MORE: Trump’s “Reciprocal” Tariffs Blocked by Libertarian Law Firm Backed by His Own Donors
In the interim, the tariffs remain fully operative, continuing to affect U.S. importers and their overseas suppliers. Estimates suggest the measures have generated roughly $10 billion in additional revenue since their April 2 implementation, though detractors warn of inflationary spillovers and disrupted supply chains.
Broader Implications for U.S. Trade Policy
Beyond the immediate legal wrangling, the contention over “Liberation Day” tariffs spotlights a deeper debate: how to balance presidential agility in responding to trade imbalances against the constitutional mandate that Congress, as the people’s representative, sets trade policy. As Professor Wolfers quipped, “If, as I expect, the courts find these tariffs unconstitutional, then we’re off to the Supreme Court—and White House lawyers will simply seek other legal pathways to sow trade upheaval” .
Meanwhile, businesses and state governments that challenged the tariffs emphasize the economic burden and legal uncertainty imposed by executive overreach. The outcome of this case will signal whether future administrations can leverage emergency powers for broad trade measures—or whether such actions will face firm judicial check.
What’s Next?
- June 5: Plaintiffs’ brief due to the Federal Circuit.
- June 9: Government’s reply brief due.
- Following Weeks: Anticipated oral arguments and a decision from the Federal Circuit.
Should the appellate court rule in favor of the government, plaintiffs may petition the Supreme Court for review. Conversely, a ruling against the administration will almost certainly prompt a definitive showdown at the nation’s highest court.
As this high-stakes legal drama unfolds, U.S. trade policy—and the constitutional contours of executive power—hang in the balance.
