$4 Trillion at Risk as Appeals Court Strikes Down Trump’s Tariffs, Supreme Court Next
In a 7-4 decision, the U.S. Court of Appeals for the Federal Circuit ruled that President Donald Trump’s sweeping global tariffs overstepped presidential powers.
The judges found that Trump improperly used the International Emergency Economic Powers Act (IEEPA) to justify duties that were “unbounded in scope, amount, and duration.”
Tariffs Declared a Congressional Power
The majority opinion stressed that the Constitution gives Congress; and only Congress, the authority to impose taxes, including tariffs. “Tariffs are a core Congressional power,” the ruling said, reaffirming one of the nation’s oldest constitutional boundaries on executive authority.
CBO Sees $4 Trillion Deficit Savings at Risk
The ruling comes just weeks after the non-partisan Congressional Budget Office projected that Trump’s tariffs could slash U.S. deficits by as much as $4 trillion over the next decade.
With duties currently generating about $30 billion per month, the CBO highlighted them as a major fiscal stabilizer in an otherwise challenging budget environment.
Billions Flowing Into Treasury Each Month
Tariffs have quickly become one of Washington’s fastest-growing revenue streams.
The administration touts them as proof that Trump’s trade policy is helping fund the government while reducing reliance on borrowing. If the courts invalidate the levies, that income could vanish almost overnight.
Trump Slams “Partisan” Decision
The former president blasted the ruling as “highly partisan” and warned that overturning his tariffs would “literally destroy the United States of America.”
“ALL TARIFFS ARE STILL IN EFFECT!” Trump said in a post on Truth Social. “Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end.”
Trump vowed to appeal to the Supreme Court, where conservatives hold a 6-3 majority, including three justices he appointed.
Tariffs Remain in Place Until October
For now, the tariffs remain in effect. The appeals court delayed enforcement of its decision until October 14, giving the administration time to file its appeal.
Businesses, investors, and foreign governments now face a six-week window of uncertainty about the future of U.S. trade policy.
Administration Warns Of Social Security And Medicare Impacts
Fortune reported that earlier this month, Solicitor General D. John Sauer and Assistant Attorney General Brett Shumate sent at letter to the court warning of an apocalyptic doomsday outcome if the tariffs were struck down.
“In such a scenario, people would be forced from their homes, millions of jobs would be eliminated, hardworking Americans would lose their savings, and even Social Security and Medicare could be threatened,” they wrote. “In short, the economic consequences would be ruinous, instead of unprecedented success.”
Businesses Say Chaos Is Already the Norm
Retailers and importers have long argued that shifting tariff policies are nearly impossible to navigate.
The National Retail Federation said unpredictable duties make it impossible to plan inventories, manage costs, or prepare for seasonal demand.
The court’s ruling adds yet another layer of uncertainty for companies that depend on global supply chains.
Importers Could Demand Billions Back
If the Supreme Court ultimately strikes down Trump’s tariffs, importers that have already paid billions in duties could demand refunds.
Analysts warn this could unleash a tidal wave of claims against the federal government, deepening the deficit rather than reducing it.
Credit Rating Agencies Watching Closely
S&P Global recently reaffirmed America’s AA+ credit rating, citing robust tariff revenues as one reason the U.S. fiscal outlook remained stable.
If the legal basis for those revenues disappears, rating agencies may reassess Washington’s long-term creditworthiness at a time when federal debt is already near historic highs.
Global Trade Deals in Jeopardy
Trump used tariffs as leverage to extract investment pledges from the European Union, Japan, and other partners.
If the courts eliminate his most sweeping duties, allies could walk back those commitments, undercutting the administration’s claims of historic trade victories.
Economists See Inflation and Growth Risks
While the CBO emphasized deficit reduction, many economists say tariffs have slowed growth and fueled inflation.
If the Supreme Court upholds the ruling, the U.S. may face a new dilemma: businesses would welcome relief from duties, but Washington would lose a powerful fiscal tool just as deficits soar.
Limited Alternatives Available
Even without IEEPA, Trump has other tools.
Section 232 of the 1962 Trade Expansion Act and Section 301 of the 1974 Trade Act allow for targeted tariffs on national security or unfair trade grounds.
There is also a never-before-used trade law, Section 338 of the Trade Act of 1930, which allows the president to impose tariffs of up to 50% on imports from countries.
But these laws are narrower in scope and may not replicate the broad $4 trillion savings the CBO highlighted.
Dissenting Judges Support Trump’s View
Four dissenting judges argued that Trump acted within his authority, warning that limiting IEEPA could weaken presidential power in future crises.
They said the plaintiffs had not proven that the law barred the president from using tariffs as an emergency measure.
Supreme Court Showdown Will Decide the Stakes
The case now heads toward the Supreme Court, where justices must decide whether Trump’s tariffs stand or fall.
At issue is not just the balance of power between Congress and the president; but whether the U.S. retains a massive new source of revenue or faces a trillion-dollar hole in its fiscal outlook.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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