A federal appeals court has dealt a major blow to President Donald Trump's trade agenda, ruling that he exceeded his authority by imposing sweeping tariffs on nearly all U.S. trading partners under emergency powers.

The U.S. Court of Appeals for the Federal Circuit on Friday upheld most of a May decision by the Court of International Trade in New York, which found Trump’s so-called "Liberation Day" tariffs unlawful.

The appeals court concluded in a 7-4 ruling that Congress never intended to grant the president "unlimited authority to impose tariffs" under the 1977 International Emergency Economic Powers Act.

The judges, however, stopped short of immediately striking down the tariffs, allowing them to remain in place while Trump appeals to the U.S. Supreme Court.

Trump had claimed extraordinary powers to bypass Congress and impose reciprocal tariffs of up to 50 percent on countries with which the United States runs trade deficits, along with a 10 percent baseline tariff on most imports.

He justified the measures by declaring longstanding trade deficits and immigration flows a "national emergency." The tariffs generated uncertainty in global markets and disrupted businesses.

Revenue from tariffs surged to $159 billion by July 2025, more than double the amount collected at the same point the previous year.

The Justice Department warned that if the tariffs were struck down, the government might be forced to refund billions, posing what it called a risk of "financial ruin" for the U.S. Treasury.

Trump's administration argued that past cases — including Richard Nixon’s emergency use of tariffs in the 1970s — gave precedent for his actions.

But the appeals court rejected the comparison, saying the law did not provide presidents with limitless tariff powers.

The ruling does not affect Trump’s other tariffs imposed under different legal authorities, including levies on steel, aluminum and autos under Section 232 of the 1962 Trade Expansion Act, or the tariffs on China that were first imposed during Trump’s initial term and later maintained by Joe Biden.

Still, the decision leaves Trump’s broad tariff strategy in jeopardy.

Without the emergency powers, his ability to impose tariffs quickly and unilaterally would be sharply limited.

The Trade Act of 1974 allows for tariffs of up to 15 percent for 150 days against countries with large trade deficits, while Section 232 requires a Commerce Department investigation before new tariffs can be imposed.

Trump vowed to challenge the ruling before the Supreme Court, warning in a post on his social media platform that "if allowed to stand, this Decision would literally destroy the United States of America."