August 31, 2025 | Dubai, UAE: The trade policies of President Donald Trump were significantly undermined this week as a US court decision declared the extensive Trump tariffs that were implemented earlier this year illegal. The decision made by the US Court of Appeal for the Federal Circuit questions the President’s power to solely impose higher import taxes as an emergency economic measure.

The Supreme Court will receive the US court decision to consider the case further. The Biden administration is expected to argue against the ruling there. Meanwhile, the Trump tariffs will continue to be in force until 14th October, and the global markets including the US will monitor Monday’s opening to evaluate the wider impact on trade and investor confidence.

Legal Issues Around US Court Decision on Trump Tariffs

The Federal Circuit Court stated that the US President does not have sole power to establish or alter tariffs as a result of emergency actions, thus the court declared the recent Trump tariffs “invalid” without the consent of Congress. The US court decision essentially changes the power to Congress, indicating that major trade moves should be subjected to legislative control.

On the Truth Social platform, former President Trump harshly hit back: “Today a Highly Partisan Appeals Court erroneously said that our Tariffs should be removed, but they know the United States of America will win in the end.”

The Trump tariffs have changed US trade relations since April. The administration raised import duties on several of the US’s major trading partners in order to lower the trade deficit and counter the advantages it believed foreign exporters were gaining. The US court decision sends these steps into doubt, consequently, it asks about the future of the trade agreements that had been reached before under the tariff regime.

Over the past few weeks, the US negotiated temporary agreements with the EU, Japan, and South Korea, giving some Trump tariffs a go while changing others. The Middle East, on the other hand, was only minimally impacted with tariffs on UAE and Saudi Arabia being at 10%. India, however, got targeted with 50% levies, and as a result, its currency fell to the record low on August 29. Brazil and South Africa were the only other two countries to be hit with higher import duties under the Trump tariffs.

Markets React Cautiously as Supreme Court Review Looms

After the US court decision, investors have reacted with caution. Wall Street was slightly lower after a week of upward trend. Previously, the market was concentrated on forecasted interest rate cuts in the middle of September. But now the legal challenge to the Trump tariffs has got the market focus shifting to another aspect-uncertainty.

Financial analysts foresee the coming weeks to be quite unstable from a market perspective when businesses will be thinking about the possible repeal of the Trump tariffs and how they will affect supply chains. “This US court decision is a source of both risk and opportunity,” commented a senior economist at a major investment bank. “If the Supreme Court supports the ruling, it may be that import costs for some sectors will become lighter, on the contrary, it could also hamper already going trade negotiations.”

It is expected that the Supreme Court will listen to the case in early October and that the verdict will be issued before the current Trump tariffs deadline on October 14. In the meantime, the existing tariffs will be in force, leaving exporters and importers in a holding pattern.

According to the Biden administration, the Trump tariffs will be defended as being necessary for the economic stability and as a bargaining chip in the trade talks. However, Congress might take over a more significant role now if the Supreme Court decides in favor of the Federal Circuit’s interpretation.

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