The U.S. Court Of International Trade Struck Down President Trump's IEEPA Tariffs – What Happens Now?

Key Takeaways:

• After coming into office, President Donald Trump has invoked the International Emergency Economic Powers Act ("IEEPA") to impose a series of tariffs on imports from worldwide trading partners. The President's numerous executive orders implementing, retracting and adjusting tariff rates have caused market uncertainty for U.S. importers and for foreign businesses operating in the global supply chain.
• On May 28, 2025, the U.S. Court of International Trade ("CIT") declared unlawful and permanently enjoined President Trump's worldwide ad valorem reciprocal tariffs and his tariffs against Canada, China and Mexico in connection with the illegal drug-trafficking and migration crisis (collectively, "President Trump's IEEPA Tariffs" or the "IEEPA Tariffs"). The Government immediately appealed the CIT's decision to the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit"). On May 29, 2025, the Federal Circuit ordered an administrative stay on the CIT's ruling and permanent injunctions and set a briefing schedule on the Government's stay motion. Accordingly, President Trump's IEEPA Tariffs remain in effect for now. The case is likely to be appealed to the U.S. Supreme Court by whichever side loses before the Federal Circuit.
• The plaintiffs did not challenge, and the CIT's decision did not address other industry-specific tariffs, such as those on steel, aluminum and automobiles imposed by President Trump pursuant to Section 232 of the 1962 Trade Expansion Act.
• If the Federal Circuit and/or the Supreme Court ultimately find that President Trump's IEEPA Tariffs are unlawful, businesses that have paid the duties since they came into effect may be entitled to a refund.
• Businesses should provision for the payment of the IEEPA Tariffs even if the Federal Circuit upholds the CIT's permanent injunction, as it is unclear how the Supreme Court may rule on this issue. While laws generally cannot be applied retroactively, U.S. importers may be required to pay additional duties on any goods which remain unliquidated—i.e., for which any outstanding tariff liability to U.S. Customs has not yet been paid by the time the Supreme Court decision is issued.

President Trump's IEEPA Tariffs
The U.S. Congress is endowed with exclusive constitutional powers to impose tariffs and other duties and to "regulate Commerce with foreign Nations." However, through a series of legislative acts, Congress has empowered the President with authority to engage in the regulation of international commerce. One statute in particular, IEEPA, is at the heart of President Trump's new and wide-ranging tariff regime.

IEEPA was adopted in order to reform the President's international commerce powers, construed broadly under the Trading with the Enemy Act ("TWEA"), which was enacted prior to IEEPA. IEEPA provides that executive authority "may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose." The President's powers to declare a national emergency are prescribed under the National Emergencies Act ("NEA"). Other than President Trump, no president has ever invoked IEEPA to impose tariffs.

Upon and following President Trump's inauguration on January 20, 2025, he invoked the NEA and IEEPA to declare national emergencies and impose by executive order various tariffs on imports:

• Through Executive Orders 14193, 14194 and 14195, President Trump declared national emergencies related to the alleged failure of Canada, China and Mexico to prevent the trafficking of fentanyl and other drugs, as well as human trafficking, into the U.S. Pursuant to these executive orders—and as amended in Executive Orders 14197, 14198, 14200, 14226, 14227, 14228, 14231, 14232 and 14256—President Trump has imposed various tariffs imports from these three countries ("trafficking-related tariffs").
• Through Executive Order 14257, President Trump declared a national emergency caused by "a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners' economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits." Pursuant to this order, the U.S. administration has imposed a 10% ad valorem tariff on "all imports from all trading partners," which was scheduled to increase for a list of 57 countries to higher rates ranging from 11% to 50% ad valorem on April 9, 2025. Executive Order 14266 suspended the increase in the worldwide reciprocal tariffs for 90 days until July 9, 2025. By Executive Orders 14259, 14266 and 14298, President Trump has issued China-specific reciprocal tariffs, separate from the trafficking-related tariffs against China (collectively, the "worldwide reciprocal tariffs").

The U.S. Court of International Trade's May 28, 2025 Decision
On April 14, 2025, five U.S. small businesses brought an action against the United States, the President and certain U.S. agencies and officials, challenging the worldwide reciprocal tariffs. On April 23, 2025, twelve U.S. States brought an action against the United States, the President and certain U.S. agencies and officials, challenging the worldwide reciprocal tariffs and the trafficking-related tariffs imposed against Canada, China and Mexico. The two cases were consolidated, and the CIT rendered a consolidated ruling on May 28, 2025.

The CIT struck down President Trump's IEEPA Tariffs on two independent grounds.

Worldwide Reciprocal Tariffs
The CIT found that President Trump's IEEPA Tariffs fall outside the scope of IEEPA's delegated executive authority to "regulate... importation." The CIT reasoned that:

• the separation of powers enshrined in the U.S. Constitution does not permit Congress to delegate its constitutionally vested powers to the executive without clearly defining the constraints on such delegated powers, and the Government's interpretation of IEEPA, if accepted, would constitute unbounded presidential authority to impose tariffs;
• the fact that the President has declared a national emergency "is not a talisman enabling the President to rewrite the tariff schedules," and "the exercise of an unlimited power...would be to strike a blow to our Constitution"; and
• IEEPA was adopted to limit executive tariff authority. To this end, the CIT noted that President Nixon had adopted a similar emergency-related tariff regime in 1974 under the TWEA, which the U.S. Court of Customs and Patent Appeals (the predecessor to the Federal Circuit) upheld as "within the power constitutionally delegated" to the President under the TWEA. United States v. Yoshida Int'l. Inc., 526 F.2d 560, 584 (C.C.P.A. 1975). However, following the decision in Yoshida, Congress reformed the President's emergency powers by cabining the executive's TWEA powers to wartime and by later adopting the more restrictive IEEPA statute to set forth the President's non-wartime emergency international commerce powers. Moreover, the same year as the Yoshida decision, Congress enacted the 1974 Trade Act, which outlined remedies available to deal with trade deficits. Section 122 of the Trade Act placed limitations on duties that may be imposed by the President to remedy trade deficits and provided that even "large and serious United States balance-of-payments deficits do not necessitate the use of emergency powers." (internal quotations omitted).

Ultimately, the CIT found the worldwide reciprocal tariffs to be outside the scope of the President's IEEPA authorities—and unlawful—as these measures "lack any identifiable limits" and invoke emergency powers to address trade deficits.

Trafficking-Related Tariffs Against Canada, China and Mexico
The CIT also held that the trafficking-related tariffs imposed against Canada, China and Mexico do not meet the statutory requirement that IEEPA powers may be exercised only to "deal with an unusual and extraordinary threat with respect to which a national emergency has been declared...and may not be exercised for any other purpose." The CIT reasoned that:

• the question before it was not whether a national security threat is worth addressing under IEEPA, but rather whether the specific measures imposed by President Trump's executive orders indeed "deal with" that threat;
• the tariffs lack a "direct link" with the problem they "purport[] to address"—that is, foreign governments' alleged failure "to arrest, seize, detain or otherwise intercept bad actors within their respective jurisdictions";
• the tariffs aimed to create "leverage" over foreign governments, but do not "deal with" the cited emergency within the meaning of IEEPA; and
• any other interpretation of IEEPA would give the President unbounded emergency powers, which would be unconstitutional.

Based on this reasoning, the CIT held that IEEPA does not authorize the reciprocal and trafficking-related tariffs and permanently enjoined the operation of those tariffs.

The CIT decision raises several important questions for U.S. importers and other companies with global supply chains.

Do the IEEPA Tariffs Still Remain in Effect?
Yes, for now. The Government immediately appealed the CIT's decision to the Federal Circuit and filed a motion to stay the injunction. The Federal Circuit stayed the CIT's ruling on May 29, 2025 pending consideration of the Government's emergency stay motion. Accordingly, as of today, President Trump's IEEPA Tariffs remain in effect. These tariffs include:

• A 25% ad valorem tariff of products imported from Canada and Mexico (in effect since March 4, 2025). President Trump declared a carve out of this duty for potash, to which a lower 10% tariff is applied (in effect since March 7, 2025).
• A 10% ad valorem tariff on energy and energy resources imported from Canada (in effect since March 4, 2025).
• A 10% ad valorem duty on "all imports from all trading partners" (in effect since April 5, 2025).
• A 30% tariff on products imported from China (a 20% trafficking-related tariff has been in effect since March 4, 2025, while an additional 10% ad valorem tariff has been in effect since May 14, 2025).

New, higher tariffs are scheduled to take effect this summer:

• On April 9, 2025, President Trump issued Executive Order 14266 imposing a 125% tariff on goods from China (which does not account for the additional 20% trafficking-related tariff he had imposed on March 4). On May 12, 2025 he suspended the higher tariff for 90 days until August 12, 2025. Accordingly, Chinese imports may face a tariff as high as 145% in August 2025.
• In Executive Orders 14257 and 14266, President Trump imposed a 10% worldwide reciprocal tariff which is set to increase on July 9, 2025 for a list of 57 countries to higher rates ranging from 11% to 50% ad valorem.

What Happens Next in the Litigation?
The Federal Circuit gave the plaintiff-appellees until June 5, 2025 to respond to the Government's motions for a stay. The Government has until June 9, 2025 to reply. If the Federal Circuit finds for the Government, the U.S. will be able to continue collecting the IEEPA Tariffs. If the court finds for the plaintiff-appellees, the Government will be enjoined from collecting the tariffs. Regardless of the outcome, the case will likely be appealed to the U.S. Supreme Court by the losing party. In fact, President Trump indicated in a post on Truth Social the Government's intention to further appeal to the Supreme Court.

How Long Will the Appeals Process Take Before a Final Decision on the IEEPA Tariffs Is Rendered?
In ordinary circumstances, it takes at least six months from a lower court decision until oral argument on appeal. However, given the urgency of this matter, the Federal Circuit may order an expedited briefing and hearing schedule and issue its ruling soon thereafter. It is also possible that the Federal Circuit will consolidate the stay question with the merits of the appeal as they are intertwined. In considering the Government's motion for stay, the Federal Circuit must also assess the likelihood of success on the merits.

If the Federal Circuit agrees with the CIT that the tariffs are deemed unlawful, we expect that the Government will immediately seek an emergency stay of the order during the pendency of the appeal before the Supreme Court. We expect that the Supreme Court would issue a decision on the stay relatively quickly—in a matter of days or weeks. The merits of the case would likely be considered by the Supreme Court on an expedited basis as well.

If the IEEPA Tariffs Are Struck Down as Unlawful, Can Importers Receive Refunds of Duties Paid?
If the IEEPA Tariffs are held to be unlawful by the end of the appellate process, U.S. businesses that have already paid the IEEPA duties may be entitled to a refund. U.S. companies interested in seeking such refunds and/or understanding steps they should take in furtherance of such refunds, should contact international trade counsel. Such steps may involve taking action quickly including seeking liquidation extensions or filing protests or Post-Summary Corrections with CBP.

Note that on May 29, 2025, a Las Vegas-based skincare startup, Chapter1 LLC, filed a class action lawsuit before the CIT seeking an order to force the Government to return IEEPA Tariffs levied against Chinese imports, now that the CIT has declared the tariffs to be unlawful. This lawsuit remains pending and is likely to be stayed until the conclusion of the appeals process on the lawfulness of the IEEPA Tariffs. It remains to be seen whether the CIT will consider it within its powers to directly order a refund by the Government to importers who have already paid duties under the IEEPA Tariff regime.

What Happens if the Tariffs are Struck Down by the Federal Circuit but then Upheld by the Supreme Court?
Importers should be aware that if the Federal Circuit reinstates the CIT's injunction on the tariffs, they may experience temporary relief. However, if the Supreme Court reverses the injunction, CBP may seek back-duties unpaid during the suspension period. In such circumstances, importers will have a strong due process argument that the IEEPA Tariffs cannot be collected for the period during which the Federal Circuit's injunction was in force.

Note, however, that even though laws generally cannot be applied retroactively, for goods that remain unliquidated before the Supreme Court renders its decision—i.e., for which the final duties have not yet been paid—a change in the law such as a reinstatement of the IEEPA Tariffs by the Supreme Court could result in importers having to pay the IEEPA Tariffs. U.S. importers that have questions about this process should contact international trade counsel.

Could President Trump Reimpose the IEEPA Tariffs Under Other Laws?
If President Trump's IEEPA Tariffs are struck down, there are other legal authorities that he may invoke to reinstate his tariff regime. However, as explained below, unlike the IEEPA Tariffs, these tariffs could not be imposed through the issuance of an executive order. Instead, most of these authorities would require following an administrative process before any tariffs could be imposed.

The other legal authorities pursuant to which some or all of the IEEPA Tariffs could be re-imposed include:

• Section 232 of the 1962 Trade Expansion Act permits the President to impose industry-specific tariffs. President Trump has already invoked this authority with respect to steel, aluminum, and automobiles (which will remain in effect irrespective of the courts' rulings on the IEEPA Tariffs). In order to implement new Section 232 tariffs, the Secretary of Commerce (in coordination with the Secretary of Defense) must first conduct comprehensive investigations to determine whether sector-specific imports pose a national security threat. This investigation can take up to 270 days.
• Section 122 of the 1974 Trade Act permits the President to impose tariffs of up to 15% ad valorem for 150 days in order to address an international balance-of-payments disequilibrium (trade deficit) or the depreciation of the dollar. This 150-day deadline could be extended with congressional approval. No prior investigation or notice need be completed to exercise this authority.
• Section 301 of the 1962 Trade Expansion Act permits the President to impose tariffs on countries that violate trade agreements with the United States or which adopt "unjustifiable" or "unreasonable" measures of international commerce. In order to implement Section 301 tariffs, the United States Trade Representative ("USTR") must first complete an investigation into the alleged violation by the foreign country. Then, the USTR has 12 to 18 months to negotiate with the foreign country to resolve the alleged violation. After this period, if no resolution is achieved, the President may impose tariffs as retaliatory measures.
• Section 338 of the 1930 Tariff Act gives the President unilateral authority to impose up to 50% tariffs on countries that "discriminate" against the U.S. This provision has never been invoked, but this lack of precedent may not prevent President Trump from doing so now. This may be an attractive option for President Trump as it does not require him to consult with Congress prior to imposing the tariffs, publicly disclose the evidence supporting the decision, or conduct an investigation before imposing the tariffs. Notably, Democratic congresspersons have introduced bills in March 2025 to repeal Section 338.

Other Legal Challenges to President Trump's IEEPA Tariffs
On May 29, 2025, two Illinois-based toy companies successfully challenged the legality of President Trump's IEEPA Tariffs in the U.S. District Court of the District of Columbia. The court found that IEEPA does not permit the executive to impose tariffs and issued a preliminary injunction on the application of those tariffs to the toy companies. The D.C. Court's decision applies only to the individual plaintiffs and has no broader effect for now. Moreover, the court stayed the operation of the preliminary injunction for 14 days to permit the Government to appeal—which it did shortly after the ruling was issued.

Meanwhile, several other legal challenges to the tariffs are pending:

• Emily Ley Paper, Inc. v Trump, brought before the District Court of the Northern District of Florida on April 3, 2025, involves a Florida corporation that sources products from China. The complaint seeks a permanent injunction against President Trump's IEEPA Tariffs on China. On May 20, 2025, the court transferred the case to the CIT, where the case is currently pending.
• Susan Webber et al v. U.S. Department of Homeland Security et al, brought before the District Court of the District of Montana on April 4, 2025, involves four members of the Blackfeet Nation in Montana who seek an order that the IEEPA Tariffs violate the separation of powers, the Constitution, and the Jay Treaty. On April 28, 2025, the court transferred the case to the CIT. The transfer is pending appeal.
• State of California v. Trump, brought by the State of California and Governor Gavin Newsom before the District Court of the Northern District of California on April 16, 2025, challenges President Trump's authority under IEEPA to impose the broad tariff regime on global imports. The plaintiffs seek an order declaring the tariffs unlawful and void. On June 2, 2025, the court dismissed the action for lack of jurisdiction, and the plaintiffs have appealed the judgment to the Ninth Circuit.
• Princess Awesome v. United States Customs and Border Protection, brought by eleven small importing business before the CIT on April 24, 2025, challenges President Trump's authority to impose the IEEPA Tariffs.
• Another legal challenge against the IEEPA Tariffs, Barnes v. United States, brought by a pro se plaintiff before the CIT on February 3, 2025 was dismissed on May 23, 2025. The court found that the plaintiff lacked standing because he did not show the tariffs caused him personal harm.

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