Appeals Court Strikes Down Trump’s Tariffs, Rates in Effect Until At Least Oct. 14

The justification used by the Trump administration to enact its sweeping tariffs scheme has been ruled illegal. However, the tariffs will stay in effect until at least mid-October.

On Friday, the U.S. Court of Appeals for the Federal Circuit ruled 7-4, with one judge not participating, against the administration’s use of the International Economic Emergency Powers Act (IEEPA) to enact the tariffs on goods from nearly 100 countries. However, the court will allow the tariffs to stay in effect until Oct. 14, giving the Trump administration time to appeal the decision to the Supreme Court.

This is the latest ruling against the White House and the novel approach that it used to enact the tariffs while bypassing Congress on the grounds of national security.

The tariffs were announced on April 2, though many were modified a week later as Trump announced that he was temporarily “suspending” some parts of the tariffs, many of which were reenacted in late July.

Days after the tariffs went into effect, five businesses sued the administration, arguing it did not have the authority to unilaterally enact the tariffs. That case was brought in the Court of International Trade, a specialized court that handles trade matters. Less than two weeks later, a second lawsuit was filed in the court, this time by a dozen states.

On May 28, a three-judge panel of the Court of International Trade granted both sets of plaintiffs’ requests for summary judgment, finding that the White House lacked the authority to enact these tariffs without Congress, which has historically been required to enact tariffs. However, the Trump administration appealed and was granted a stay, allowing the tariffs to remain in effect while it appealed.

Today’s ruling is the first appeal, but presumably not the last. The appeals court affirmed the previous ruling that found that the IEEPA does not allow for most of the tariffs that the Trump administration enacted via executive orders. However, its ruling allows for the tariffs to stay in effect until Oct. 14, allowing the White House time to appeal to the Supreme Court.

This won’t affect some of the tariffs, such as the ones that have been issued on specific products like foreign steel and automobiles, but it would reverse most of the country-specific tariffs, including the ones related to the cigar industry.

If the ruling is upheld by the Supreme Court, it would mean the end of the tariffs that have raised the prices of most cigars. Following April’s announcements, dozens of companies, including the vast majority of the 15 largest cigar companies, have raised prices in response to the tariffs.

Most companies have modified the prices, while others have added 5 percent tariff surcharges that are applied to orders. The surcharges were introduced under the premise that if the tariffs went away, the surcharges would go away as well.

The amount consumers are paying for the tariffs varies wildly and is dependent both on the specific cigar and the place where the cigar is purchased. The tariff is applied to the “direct import price,” which is neither the wholesale price that retailers buy the cigars for nor the price that consumers pay for cigars. Unlike state tobacco taxes, which are calculated based on the wholesale price, the tariffs are baked into the wholesale price. Because of this, the tariffs aren’t simply be passed onto consumers; consumers will likely end up paying at least, but oftentimes more than double whatever the increase is. In states with a percentage-based tobacco tax, that amount will increase too and the tariff-related price changes will also increase the sales tax paid.