President Donald Trump has audaciously claimed virtually unlimited power to bypass Congress and impose sweeping taxes on foreign products.

Now a federal appeals court has thrown a roadblock in his path.

The U.S. Court of Appeals for the Federal Circuit ruled Friday that Trump went too far when he declared national emergencies to justify imposing sweeping import taxes on almost every country on earth. The ruling largely upheld a May decision by a specialized federal trade court in New York. But the 7-4 appeals court decision tossed out a part of that ruling striking down the tariffs immediately, allowing his administration time to appeal to the U.S. Supreme Court.

The ruling was a big setback for Trump, whose erratic trade policies have rocked financial markets, paralyzed businesses with uncertainty and raised fears of higher prices and slower economic growth.

Which tariffs did the court knock down?

The court’s decision centers on the tariffs Trump slapped in April on almost all U.S. trading partners and levies he imposed before that on China, Mexico and Canada.

Trump on April 2 — Liberation Day, he called it — imposed so-called reciprocal tariffs of up to 50% on countries with which the United States runs a trade deficit and 10% baseline tariffs on almost everybody else.

The president later suspended the reciprocal tariffs for 90 days to give countries time to negotiate trade agreements with the United States — and reduce their barriers to American exports. Some of them did — including the United Kingdom, Japan and the European Union — and agreed to lopsided deals with Trump to avoid even bigger tariffs.

Those that didn’t knuckle under — or otherwise incurred Trump’s wrath — got hit harder earlier this month. Laos got rocked with a 40% tariff, for instance, and Algeria with a 30% levy. Trump also kept the baseline tariffs in place.

Claiming extraordinary power to act without congressional approval, Trump justified the taxes under the 1977 International Emergency Economic Powers Act by declaring the United States’ longstanding trade deficits “a national emergency.”

In February, he’d invoked the law to impose tariffs on Canada, Mexico and China, saying that the illegal flow of immigrants and drugs across the U.S. border amounted to a national emergency and that the three countries needed to do more to stop it.

The U.S. Constitution gives Congress the power to set taxes, including tariffs. But lawmakers have gradually let presidents assume more power over tariffs — and Trump has made the most of it.

The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to U.S. national security.

Nor does it include tariffs that Trump imposed on China in his first term — and President Joe Biden kept — after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries.

Why did the court rule against the president?

The administration had argued that courts had approved then-President Richard Nixon’s emergency use of tariffs in the economic chaos that followed his decision to end a policy that linked the U.S. dollar to the price of gold. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language later used in IEEPA.

In May, the U.S. Court of International Trade in New York rejected the argument, ruling that Trump’s Liberation Day tariffs “exceed any authority granted to the President’’ under the emergency powers law. In reaching its decision, the trade court combined two challenges — one by five businesses and one by 12 U.S. states — into a single case.

On Friday, the federal appeals court wrote in its 7-4 ruling that “it seems unlikely that Congress intended to … grant the President unlimited authority to impose tariffs.”

A dissent from the judges who disagreed with Friday’s ruling clears a possible legal path for Trump, concluding that the 1977 law allowing for emergency actions “is not an unconstitutional delegation of legislative authority under the Supreme Court’s decisions,” which have allowed the legislature to grant some tariffing authorities to the president.

So where does this leave Trump’s trade agenda?

The government has argued that if Trump’s tariffs are struck down, it might have to refund some of the import taxes that it’s collected, delivering a financial blow to the U.S. Treasury. Revenue from tariffs totaled $159 billion by July, more than double what it was at the same point the year before. Indeed, the Justice Department warned in a legal filing this month that revoking the tariffs could mean “financial ruin” for the United States.

It could also put Trump on shaky ground in trying to impose tariffs going forward.

“While existing trade deals may not automatically unravel, the administration could lose a pillar of its negotiating strategy, which may embolden foreign governments to resist future demands, delay implementation of prior commitments, or even seek to renegotiate terms,” Ashley Akers, senior counsel at the Holland & Knight law firm and a former Justice Department trial lawyer, said before the appeals court decision.

The president vowed to take the fight to the Supreme Court. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote on his social media platform.

Trump does have alternative laws for imposing import taxes, but they would limit the speed and severity with which he could act. For instance, in its decision in May, the trade court noted that Trump retains more limited power to impose tariffs to address trade deficits under another statute, the Trade Act of 1974. But that law restricts tariffs to 15% and to just 150 days on countries with which the United States runs big trade deficits.

The administration could also invoke levies under a different legal authority — Section 232 of the Trade Expansion Act of 1962 — as it did with tariffs on foreign steel, aluminum and autos. But that requires a Commerce Department investigation and cannot simply be imposed at the president’s own discretion.

This story was originally featured on Fortune.com

© AP Photo/Mark Schiefelbein

A case that could provide the Trump administration with new and expansive power over the traditionally independent Federal Reserve focused Friday on what would constitute “cause” to remove a high-ranking official at the nation’s central bank.

Federal Reserve Governor Lisa Cook has requested an emergency injunction—in the form of a temporary restraining order—to block President Donald Trump’s attempt to fire her over allegations that she committed mortgage fraud when she purchased a home and condo in 2021. She was appointed to the Fed’s board by former president Joe Biden in 2022.

Arguments in court Friday centered on what constitutes “cause,” which in this case are unproven accusations by a Trump appointee that Cook committed mortgage fraud.

In an exchange with U.S. District Judge Jia Cobb, Cook’s lawyer, Abbe David Lowell, said Trump’s motivations are clear. “He’s already said he wants a majority (on the Fed board). He’s bragged that he’s going to get it.’’

If her firing is allowed to stand, it would likely erode the Fed’s longstanding independence from day-to-day politics. No president has ever fired a Fed governor in the agency’s 112-year history. Economists broadly support Fed independence because it makes it easier for the central bank to take unpopular steps such as raising interest rates to combat inflation.

Cook has asked the court to issue an emergency order that would prevent her firing and enable Cook to remain on the seven-member board of governors while her lawsuit seeking to overturn the firing makes its way through the courts. Many observers expect her case will end up at the U.S. Supreme Court.

In court Friday, the Justice Department’s Yaakov Roth, who represented the Trump administration at the hearing, complained that Cook had not offered an explanation for anything questionable in her mortgage documents or a defense against the fraud allegations.

The allegations remain just that, leveled by Bill Pulte, Trump’s appointee to the agency that oversees mortgage giants Fannie Mae and Freddie Mac.

And late Thursday, Pulte, said that Cook had allegedly committed fraud on a third property, a condominium in Cambridge, Massachusetts, in April 2021.

Pulte said in a social media post that Cook classified the condo as a “second home,” but in financial disclosure documents filed in 2022 through 2025 with the government, she described it as an “investment/rental” property. Pulte added that mortgage rates and down payments for second homes can be lower than for investment properties.

Pulte also alleged, without evidence, that Cook may have rented out two properties in Ann Arbor, Mich. and Atlanta, which were the focus of a criminal referral he made last week and which he said she has claimed as her principal residence.

In a statement, Cook’s lawyer, Lowell, decried “an obvious smear campaign aimed at discrediting Gov. Cook … Nothing in these vague, unsubstantiated allegations has any relevance to Gov Cook’s role at the Federal Reserve, and they in no way justify her removal from the Board.”

The law governing the Fed says the president can’t fire a governor just because they disagree over interest rate policy. Trump has repeatedly demanded that the Fed, led by Chair Jerome Powell, reduce its key interest rate, which is currently 4.3%. Yet the Fed has kept it unchanged for the last five meetings.

But the president may be able to fire a Fed governor “for cause,” which has traditionally been interpreted to mean inefficiency, neglect of duty, or malfeasance. Cook’s lawyers argue that it also refers only to conduct while in office. They also say that she was entitled to a hearing and an opportunity to rebut the charges.

“The unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation — does not amount to ‘cause,’” the lawsuit says.

Trump has moved to fire a number of leaders from a host of independent federal regulatory agencies, including at the National Transportation Safety Board, Surface Transportation Board, Equal Employment Opportunity Commission, and Nuclear Regulatory Commission, as well as the Fed.

The Supreme Court declined to temporarily block the president from firing directors of some independent agencies earlier this year while those cases move through the courts. Legal experts say the high court this year has shown more deference to the president’s removal powers than it has in the past.

Still, in a case in May, the Supreme Court appeared to single out the Fed as deserving of greater independence than other agencies, describing it as “a uniquely structured, quasi-private entity.” As a result, it’s harder to gauge how the Supreme Court could rule if this case lands in its lap.

As a governor, Cook votes on all the Fed’s interest rate decisions and helps oversee bank regulation. The Fed has substantial power over the economy by raising or cutting its key interest rate, which can then influence a broad range of other borrowing costs, including mortgages, car loans, and business loans.

Pulte’s charge that Cook has committed mortgage fraud is one he has also made against two of Trump’s biggest political enemies, California Democratic Sen. Adam Schiff and New York Attorney General Letitia James, who has prosecuted Trump. Pulte has ignored a similar case involving Ken Paxton, the Texas attorney general who is friendly with Trump and is running for Senate in his state’s Republican primary.

Cook’s lawsuit responds by arguing that the claims are just a pretext “in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve.”

If Trump can replace Cook, he may be able to gain a 4-3 majority on the Fed’s governing board. Trump appointed two board members during his first term and has nominated a key White House economic adviser, Stephen Miran, to replace Adriana Kugler, another Fed governor who stepped down unexpectedly Aug. 1. Trump has said he will only appoint people to the Fed who will support lower rates.

This story was originally featured on Fortune.com

© AP Photo/Mark Schiefelbein, File