Trump hasn't won yet! On Thursday, a U.S. court began oral arguments, facing "cancellation risks" for "reciprocal tariffs."

The iconic tariff stick of U.S. President Trump is hanging over a crucial court debate. His tariff-centered trade strategy is facing a severe legal test, the outcome of which could turn several of his recent trade achievements into bubbles.

On July 31 (this Thursday), the U.S. Court of Appeals for the Federal Circuit will hold oral arguments in the case of "VOS Selections v. Trump." The core issue of the case is whether the Trump administration has the authority to invoke the International Emergency Economic Powers Act (IEEPA) of 1977 to impose large-scale tariffs. This lawsuit, led by small business owners, has become a legal frontline in challenging presidential trade powers.

The timing of this hearing is particularly delicate. Just days ago, according to CCTV News, Trump announced an agreement with the European Union to impose a 15% tariff on most EU goods.

Legal Controversy Over Tariff Powers

The focus of this legal showdown is whether the Trump administration's use of the IEEPA exceeds its authority. The Trump administration argues that issues such as trade deficits and fentanyl trafficking constitute a "national emergency," thus granting it the right to use the IEEPA to "regulate imports," including the imposition of tariffs. White House spokesperson Kush Desai stated to the media that the government is "legally and fairly using the powers granted to the executive branch by Congress."

However, the plaintiffs—several small business owners in the U.S.—sharply counter that the IEEPA has never been used to impose tariffs in its nearly 50-year history, and the text of the act does not explicitly grant the president this power.

In fact, in May of this year, a panel of three judges from the U.S. Court of International Trade made a ruling favorable to the plaintiffs, determining that Trump exceeded his statutory authority in using the IEEPA. However, that ruling has been temporarily stayed by the appellate court, pending further hearings this Thursday. This judicial outcome will directly affect the legality of the "reciprocal tariffs" and "fentanyl-related tariffs" imposed by the U.S. based on the IEEPA.

[According to previous reports from CCTV News](https://mbd.baidu.com/newspage/data/landingsuper?id=1833409661645291211&wfr=&third=baijiahao&baijiahao_id=1833409661645291211&c_source=kunlun&c_score=0.999000&p_tk=7934fz1rSzgU2C3dV7c0NwHt%2FXMsascVu937ct%2FJS0O0PaM0b6%2BUaGv%2BPqUSeiTVDqfh2kZ8iVoeA4XNza44n6wnAG%2FNkxhWjzxLgX5z9NE7brid06uRQRotMBTG16P3U%2FkKrASPv%2Frv8XGVpOx0xaDKuH3eA7Hg%2Fu5bKSUl5kdWcQ8%3D&p_timestamp=1748475974&p_sign=aceb45f952756b076e29c20c187db154&p_signature=145f4b889c698fd56622c521aa7ba1f8&__pc2According to reports, on May 28 local time, the U.S. International Trade Court blocked the tariff policy announced by President Trump on April 2 from taking effect, ruling that Trump had overstepped his authority. Subsequently, the U.S. Court of Appeals for the Federal Circuit temporarily overturned the ruling of the U.S. International Trade Court and scheduled a hearing for the appeal on July 31.

It is worth noting that the "VOS Selections" case is not an isolated incident; it is one of the fastest-moving lawsuits challenging Trump's tariff powers.

According to media reports, there are currently more than six federal lawsuits targeting the applicability of the IEEPA. For example, in another case, "Learning Resources, Inc. v. Trump," a federal judge in Washington, D.C. made a broader ruling, directly stating that the IEEPA does not allow the president to take any unilateral tariff actions.

The Supreme Court May Be the Final Arbiter

Regardless of the outcome of the federal appeals court ruling this Thursday, there is widespread expectation that the final destination of this case will be the U.S. Supreme Court. Given the presidential powers involved, congressional authorization, and the far-reaching implications for global trade, its significance is sufficient to warrant Supreme Court intervention.

Legal experts and market analysts are closely monitoring the developments. Ted Murphy, head of global trade practice at Sheppard Mullin, candidly stated in a media interview: "I think tariffs are at risk."

Analysts at investment bank Piper Sandler noted in a report that if the Trump administration ultimately loses, nearly all trade agreements it has recently reached will be deemed "illegal." This potential risk introduces new variables for global investors and companies reliant on international supply chains

The White House's "Plan B"

A previous article from Wall Street Insight titled “Don't just focus on August 1st, this key court ruling is the biggest variable in trade?” stated that even if there are setbacks in court, the market should not expect the threat of tariffs to come to an end.

JP Morgan's analysis suggests that tariffs are central to the current U.S. government's economic agenda. Once the IEEPA pathway is blocked, the White House is likely to initiate "Plan B," turning to other legal tools such as Sections 122, 232, 301, and 338 of the Trade Act.

While this shift may maintain similar average tariff levels, the process will be more complex and usher in a period of trade turbulence that could last for months and be more difficult to predict