September 2, 2025
Trump's Tariff Powers Face Legal Setback. What Now?
Tariffs remain enforceable for now. India vows firm stance as tensions escalate.
In the span of just 72 hours, what had once seemed like a durable, if controversial, pillar of Trump-era economic policy began to buckle. Federal courts delivered rulings against the administration’s use of emergency powers, while half a world away, India emerged as an adversary in a swelling trade war that now threatens to redraw the map of global commerce.
On August 29, the U.S. Court of Appeals for the Federal Circuit handed down a 7-4 decision that cut deep into the legal foundations of Trump’s tariff program. The court ruled that the administration had “overstepped presidential powers” and gone “beyond that delegated by IEEPA” — a sharp rebuke of the White House's reliance on emergency authorities to enact sweeping trade measures.
This wasn’t an isolated shot across the bow. It capped a series of increasingly damning rulings from lower courts. The Court of International Trade and federal judges in Washington, D.C., had already deemed the emergency-based tariffs “unlawful as to all” and asserted that “the President has no independent discretion to impose or alter tariffs.” In other words: The legal tide is turning.
India Fights Back Against a 50% Tariff Wall
At the same time, tensions escalated with India, which is now facing the most punishing tariffs of any major U.S. trading partner. The full 50% levy — 25% for what the administration terms “reciprocal trade barriers,” and another 25% tied to India's ongoing oil imports from Russia — went into effect August 27, according to CNN. The move hits $48 billion worth of India's $87 billion in annual exports to the U.S.
India’s reaction was swift and firm. Trade Minister Piyush Goyal publicly declared that the country “will neither bow down nor ever appear weak,” while rolling out a strategy to diversify trade across 40 new markets (Al Jazeera). The economic impact is already biting. India’s massive textile sector, which supports 45 million workers, is bracing for job losses projected between 100,000 and 300,000. Major industry players are also seeing financial fallout — some stock prices have dropped by as much as 18%, India.com reported.
The Cost to Importers … and Everyone Else
Caught in the crossfire are importers, now operating in what the Congressional Budget Office identifies as the most tariff-heavy climate since the Great Depression. With average rates climbing to 18.6% and impacting $2.7 trillion in trade, major retailers say they’re watching costs “increase each week,” while supply chain snarls are being compared — unfavorably — to those seen during the COVID pandemic (CNBC).
What Comes Next: Legal Deadlines and Strategic Calculations
Although the court rulings have been scathing, they aren’t yet enforceable. All remain stayed pending appeal. That means the tariffs stay in place until at least October 14, 2025, the deadline for the Trump administration to file its case with the Supreme Court.
Still, the legal consensus is troubling for the administration. The Center for Strategic and International Studies argues the pattern of losses across multiple courts points to “serious constitutional problems.” If the Supreme Court strikes down the use of emergency powers in trade policy, the ripple effects could include refunds on billions in tariff revenue — though how that would actually play out remains legally murky.
Congress is watching closely. Senators Chuck Grassley and Maria Cantwell have introduced bipartisan legislation to require Congressional approval before future administrations can impose sweeping tariffs, aiming to “restore Congress’ constitutional role in trade.”
Global Consequences Loom
The diplomatic side is heating up, too. Commerce Secretary Lutnick has recently floated a 200% tariff on Indian pharmaceuticals — an explosive threat, considering India supplies half of America’s generic drug market (Advisory). That kind of move could send U.S. healthcare costs soaring, with limited short-term alternatives.
Meanwhile, China, Canada, and the European Union have all filed formal complaints with the World Trade Organization. But with the WTO’s dispute resolution system still gridlocked, the chances of near-term relief are slim.
Legal firestorms. Diplomatic showdowns. Domestic industries in limbo. For an administration that built its trade policy on the scaffolding of emergency powers, the structure is showing cracks — and the countdown to a Supreme Court test has already begun.
