Trump's trade deals and tariffs are on the chopping block in court. What happens next
Investment
CNBC

Trump's trade deals and tariffs are on the chopping block in court. What happens next

July 26, 2025
07:51 PM
8 min read
AI Enhanced
financialindustrialsmaterialsmarket cyclesseasonal analysisgeopolitical

Key Takeaways

Trump has recently announced preliminary trade deals with Japan and other countries, and many of his paused "reciprocal" tariffs are set to resume next month.

Article Overview

Quick insights and key information

Reading Time

8 min read

Estimated completion

Category

investment

Article classification

Published

July 26, 2025

07:51 PM

Source

CNBC

Original publisher

Key Topics
financialindustrialsmaterialsmarket cyclesseasonal analysisgeopolitical

From what the evidence shows, It's worth noting that President Donald Trump and British Prime Minister Keir Starmer react after picking up the trade agreement with the U

Papers that Trump dropped as they speak to the media during the G7 summit in Kananaskis, Alberta, Canada, June 16, 2025, in today's market environment

Furthermore, Additionally, Kevin Lamarque | ReutersPresident 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-file 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

On the other hand, The Trump administration says that that expansive tariff power derives from the International Emergency Economic Powers Act, or IEEPA, in this volatile climate

However, The bulk of Trump's biggest tariffs — including his fentanyl-related duties on Canada, Mexico and China, and the worldwide "recical" tariffs he first unveiled in early April — rest on his invocation of that law

Court of International Trade struck those tariffs down in late May, ruling that Trump exceeded his authority under IEEPA, amid market uncertainty

People walk past the United States Court of International Trade, Watson Courthouse in lower Manhattan on May 29, 2025 in New York City, considering recent developments

Spencer Platt | Getty ImagesBut the U

Furthermore, Court of Appeals for the Federal Circuit quickly paused that decision, keeping the tariffs in effect while Trump's legal challenge plays out, in today's market environment

On the other hand, The case, known as V

Additionally, Selections v

Trump, is the furthest along of more than half a dozen federal lawsuits challenging Trump's use of the emergency-powers law

At the same time, It's set for oral argument before the Federal Circuit on Thursday morning, in this volatile climate

Moreover, "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

On the other hand, "So I think there are legitimate questions

Additionally, 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

But attorneys representing the handful of small es 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

Watch now5:1105:11Jonathan Kanter on Trump tariff ruling: This's one big beautiful messSquawk BoxAttorneys for Trump and his administration, however, argue that Congress has long empowered presidents to impose tariffs to address key national concerns

Furthermore, They argue that the statute's language authorizing Trump to "regulate … importation" means he can use it to impose tariffs

Supreme Court incomingNo matter how the Federal Circuit ultimately rules in V. , 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 (which is quite significant), in this volatile climate. "Trump will bably continue to lose in the lower courts, and we believe the Supreme Court is highly unly to rule in his favor," U

Policy analysts from Piper Sandler wrote in a re note Friday morning, considering recent developments

On the other hand, Watch now9:1809:18Trump’s tariff appeal could trigger a constitutional showdown: Steven BlitzInside IndiaThe 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, in today's financial world

Additionally, "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

At the same time, "So are his letters informing countries of their new tariffs, the current 10% minimum, and the recical tariffs he has posed or threatened," they added

It's nically un 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, However, Trump in mid-June signed an executive order specifying that he is invoking the emergency-powers law as part of a U

Trade agreement with the United Kingdom

In contrast, 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 ImagesTrump this month has also sent 25 letters to individual world leaders, dictating the new tariff rates that their countries' U

Exports will face starting Aug, considering recent developments

That's the date when Trump's recical tariffs on dozens of countries' imports — which were unveiled in early April and then repeatedly put on pause — are set to turn back on

On the other hand, Trump has said that his letters are tantamount to bilateral trade deals, considering recent developments

However, Furthermore, Those letters do not explicitly reference IEEPA

But their language echoes the same arguments unfair trade, deficits and national security that Trump invoked during his recical tariff rollout (which is quite significant) (noteworthy indeed). "The Administration is legally and fairly using tariff powers that have been granted to the executive branch by the Constitution and Congress to level the playing field for American workers and safeguard our national security," White House spokesman Kush Desai told CNBC

Read more CNBC coverageTrump trade rep sets low bar for China trade talks, no 'enormous breakthrough' expectedTrump says he's giving Russia less than two weeks to reach peace deal with UkraineEurope balks at 'unbalanced' U, in today's market environment

Trade dealMassie: Blocking Epstein vote could be political liability for GOP in midtermsTrump announces EU trade deal with 15% tariffsLutnick: Trump wants 'good enough' EU trade offer — but what does that mean

How Trump and trade wars pushed Russia and Ukraine into the coldTrump's trade deals and tariffs are on the chopping block in courtNew bill would reward companies that give stock to rank-and-file employeesDOJ asks Epstein accomplice Maxwell ' 100 different people,' lawyer saysThe White House ignored CNBC's request to confirm that Trump's leader-to-leader letters, and the tariff rates set in his recent spate of trade deals, hinge on IEEPA authority

However, It has, however, confirmed that the massive 50% tariff Trump set on imports from Brazil did, in fact, rely on IEEPA powers (noteworthy indeed)

Strangely, that letter focused less on trade and more on Trump's gripes Brazil's treatment of its former president, Jair Bolsonaro, who is facing trial over his role in an alleged coup to overturn his 2022 reelection loss (this bears monitoring)

Other casesOne day after the federal trade court issued its May decision in V

However, District Judge Rudolph Contreras dered an even broader ruling against the Trump administration in a separate case in Washington, D

Moreover, , federal court, given current economic conditions

The evidence shows three-judge panel in V (which is quite significant)

Nevertheless, Specifically found that some of the tariffs Trump had imposed were unauthorized by IEEPA (noteworthy indeed), given the current landscape

However, But Contreras, in the case known as Learning Resources, Inc

Trump, ruled that the law itself does not allow a president to take any unilateral tariff actions

The government appealed that ruling to the U

Court of Appeals for the D, in today's financial world

Circuit, which paused a preliminary injunction that Contreras had issued

Furthermore, Oral arguments in the case are set for Sept, in today's financial world

Nevertheless, Two other federal lawsuits challenging the tariffs — one from the state of California, and one filed in Montana federal court by members of the indigenous Blackfeet nation — are set for separate oral arguments on Sept

Furthermore, 17 before the U

Court of Appeals for the Ninth Circuit

Conversely, At least three more pending cases before the Court of International Trade have been stayed until a final decision is returned in V, in today's market environment. , according to the Congressional Re Service.