Trump’s trade deals, tariffs face key test in court next week
U.S. President Donald Trump and British Prime Minister Keir Starmer react after picking up the trade agreement with the U.K. papers that Trump dropped as they speak to the media during the G7 summit in Kananaskis, Alberta, Canada, June 16, 2025.
Kevin Lamarque | Reuters
President Donald Trump‘s sweeping tariff powers and recent trade deals could soon run into a legal buzzsaw.
A federal appeals court is set to hear oral arguments next week in a high-profile lawsuit challenging Trump’s stated authority to effectively slap tariffs at any level on any country at any time, so long as he deems them necessary to address a national emergency.
The Trump administration says that that expansive tariff power derives from the International Emergency Economic Powers Act, or IEEPA.
The bulk of Trump’s biggest tariffs — including his fentanyl-related duties on Canada, Mexico and China, and the worldwide “reciprocal” tariffs he first unveiled in early April — rest on his invocation of that law.
The U.S. Court of International Trade struck those tariffs down in late May, ruling that Trump exceeded his authority under IEEPA.
People walk past the United States Court of International Trade, Watson Courthouse in lower Manhattan on May 29, 2025 in New York City.
Spencer Platt | Getty Images
But the U.S. Court of Appeals for the Federal Circuit quickly paused that decision, keeping the tariffs in effect while Trump’s legal challenge plays out.
The case, known as V.O.S. Selections v. Trump, is the furthest along of more than half a dozen federal lawsuits challenging Trump’s use of the emergency-powers law.
It’s set for oral argument before the Federal Circuit on Thursday morning.
“I think the tariffs are at risk,” said Ted Murphy, partner and head of global trade practice at law firm Sidley Austin, in an interview with CNBC.
The law has “never been used for this purpose,” and it’s “being used quite broadly,” Murphy said. “So I think there are legitimate questions.”
V.O.S.
IEEPA gives Trump some powers to deal with national emergencies stemming from “any unusual and extraordinary threat” that comes in whole or in large part from outside the U.S.
But attorneys representing the handful of small businesses that sued Trump argue that the law does not let him unilaterally impose tariffs.
“IEEPA nowhere mentions tariffs, duties, imposts, or taxes, and no other President in the statute’s nearly 50-year history has claimed that it authorizes tariffs,” they wrote in a court brief this month.
Attorneys for Trump and his administration, however, argue that Congress has long empowered presidents to impose tariffs to address key national concerns.
They argue that the statute’s language authorizing Trump to “regulate … importation” means he can use it to impose tariffs.
Supreme Court incoming
No matter how the Federal Circuit ultimately rules in V.O.S., the case appears destined for the Supreme Court, which bears a 6-3 conservative majority and includes three justices appointed by Trump.
But some experts still expect that Trump’s IEEPA tariffs will be scrapped.
“Trump will probably continue to lose in the lower courts, and we believe the Supreme Court is highly unlikely to rule in his favor,” U.S. policy analysts from Piper Sandler wrote in a research note Friday morning.
The analysts wrote that such a loss would effectively mean the collapse of almost every trade development that Trump has held up as an accomplishment during his first six months in office.
“If the Supreme Court rules against Trump, all of the trade deals Trump has reached in recent weeks — and those he will reach in the coming days — are illegal,” the analysts wrote.
“So are his letters informing countries of their new tariffs, the current 10% minimum, and the reciprocal tariffs he has proposed or threatened,” they added.
On what authority?
It is technically unclear whether everything Piper Sandler describes is undergirded by IEEPA. For instance, Trump has recently announced only the broad outlines of trade agreements with Japan, Vietnam, Indonesia and the Philippines — and those deals have yet to be finalized.
However, Trump in mid-June signed an executive order specifying that he is invoking the emergency-powers law as part of a U.S. trade agreement with the United Kingdom.
US President Donald Trump (L) shakes hands with British Prime Minister Keir Starmer as they speak to reporters after meeting during the Group of Seven (G7) Summit at the Pomeroy Kananaskis Mountain Lodge in Kananaskis, Alberta, Canada on June 16, 2025.
Brendan Smialowski | Afp | Getty Images
Trump this month has also sent 25 letters to individual world leaders, dictating the new tariff rates that their countries’ U.S. exports will face starting Aug. 1.
That is the date when Trump’s reciprocal tariffs on dozens of…
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