US court rules Trump's tariffs are illegal - but leaves them in place for now

Donald Trump's tariffs are unconstitutional, but they can remain in place for now, the US Court of Appeals has said.

The court ruled that the US president was not legally allowed to declare national emergencies and impose import taxes on almost every country, as it mostly upheld a decision by a specialised federal trade court. However, the court struck down a portion of the previous ruling that would have immediately cancelled the tariffs, allowing the Trump administration time to appeal to the US Supreme Court.

"ALL TARIFFS ARE STILL IN EFFECT," Mr Trump wrote on Truth Social, adding that the "highly partisan" court had "incorrectly said that our tariffs should be removed". The decision could limit the speed and severity with which Mr Trump could act, despite having alternative laws for imposing import taxes.

Mr Trump's tariffs, which reversed decades of US trade policy, increased fears of higher prices and slower economic growth after they shook the global markets. However, they also alienated US trading partners and allies, as Mr Trump used the levies to pressure the European Union, Japan, and other countries into accepting one-sided trade deals.

"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 ruling. "A ruling against the tariffs would represent not just a legal defeat, but a serious blow to the administration's coercive trade diplomacy model." Read more from Sky News:US blocks Palestinian resident from UN meetingTrump revokes Secret Service protection for Harris As a result, the US government might have to refund some of the import taxes it has collected, which would deliver a financial blow to its Treasury, which collected $142bn in tariff revenue by July - more than double at the same point a year before.

In its legal filing this month, the Justice Department warned that revoking the tariffs could mean "financial ruin" for the US. "If these Tariffs ever went away, it would be a total disaster for the Country.

It would make us financially weak, and we have to be strong," Mr Trump added on Truth Social after the ruling..