Highlights
- The U.S. Court of Appeals for the Federal Circuit, in a 7‑4 decision, held on Aug. 29, 2025, held that the International Emergency Economic Powers Act (IEEPA) does not authorize President Donald Trump to impose sweeping tariffs on nearly all imported goods from nearly all U.S. trading partners.
- Although the ruling affirms the U.S. Court of International Trade's (CIT) merits judgment, the Federal Circuit vacated the universal injunction issued by the CIT and remanded the case for further relief proceedings. The decision is stayed until Oct. 14, 2025, allowing time for the government to appeal to the U.S. Supreme Court.
- This Holland & Knight alert takes a closer look at the Federal Circuit decision and several potential developments on the horizon.
The U.S. Court of Appeals for the Federal Circuit, in a 7‑4 decision on Aug. 29, 2025, struck down President Donald Trump's use of the International Emergency Economic Powers Act (IEEPA or the Act) to impose sweeping tariffs on nearly all imported goods from nearly all U.S. trading partners.
Although the Federal Circuit, in V.O.S. Selections, Inc. v. Trump, affirmed the U.S. Court of International Trade's (CIT) merits judgment, it nevertheless vacated the universal injunction issued by the CIT and remanded the case for further relief proceedings. The appellate court also stayed its decision until Oct. 14, 2025, allowing time for the government to appeal to the U.S. Supreme Court. On Sept. 4, 2025, the government petitioned for Supreme Court review on an expedited basis.
Background
The government's appeal concerns five executive orders (EOs) imposing duties on United States trade partners in response to an alleged national emergency declared by the president under IEEPA. The measures are known as the "Reciprocal Tariffs" and "Trafficking and Immigration Tariffs." The Reciprocal Tariffs imposed an additional 10 percent duty on nearly all imports, with country-specific increases (ranging from 11 percent to 50 percent) scheduled for certain trading partners. The Trafficking and Immigration Tariffs were imposed with respect to nearly all goods imported into the United States from Canada, Mexico and China.
Small businesses, including wine importer V.O.S. Selections Inc., together with a coalition of states, challenged the tariffs in the CIT, arguing that the president exceeded his authority under IEEPA in imposing the Reciprocal Tariffs and Trafficking and Immigration Tariffs. On May 28, 2025, a three-judge panel of the CIT agreed, holding that the president had acted outside his statutory authority and enjoined its enforcement. The president appealed and, after expedited briefing and argument, the full Federal Circuit affirmed the CIT's reasoning on Aug. 29, 2025, while temporarily staying its decision to allow the government time to appeal.
Analysis
The Federal Circuit considered specifically whether the president's Reciprocal and Trafficking and Immigration Tariffs, imposed under the five EOs, are authorized by IEEPA. The court held that they are not. Specifically, the majority concluded that IEEPA could not serve as a foundation for tariffs of the breadth and scope imposed by the president.
First, the Federal Circuit reviewed the legislative history of IEEPA and found that while IEEPA grants the president the power to "regulate" foreign commerce, such power to "regulate" does not include an unlimited authority to impose tariffs. The court noted that unlike other statutes that either explicitly grant the president the power to adjust tariffs (generally subject to numerous procedural requirements and limitations) or contain provisions related to duties, or where the legislative history clearly indicates an intent to grant the president the authority to impose tariffs, this is not the case with respect to IEEPA. Rather, statutory text does not reference "tariffs," "duties" or "taxes" at all, nor does IEEPA's legislative history suggest an intention by Congress to grant such unlimited tariff authority to the president. Noting that the power to tariff is a form of taxation generally reserved for Congress under Article I of the U.S. Constitution, the court also found that Congress' delegation of such a broad tariff authority to the president would need to be more explicit. Thus, although the majority conceded that IEEPA provides the president significant authority to "regulate" imports in response to a declared national emergency, it concluded that the Act did not include "such wide-ranging authority to impose tariffs of the nature of the Trafficking and Reciprocal Tariffs."
The majority distinguished the Reciprocal and Trafficking and Immigration Tariffs from tariffs that were upheld in a 1971 case arising under IEEPA's predecessor statute, the Trading with the Enemies Act (TWEA), finding that the more limited tariffs in that earlier case did not exceed the authority granted to President Richard Nixon by TWEA, whereas the Reciprocal and Trafficking and Immigration Tariffs were "unbounded in scope, amount, and duration." See Yoshida 'Int'l v. United States, 378 F. Supp. 1155, 1175–76 (Cust. Ct. 1974), 'rev'd, 526 F.2d 560 (CCPA 1975). Furthermore, despite similar statutory language in both TWEA and IEEPA, the court found that IEEPA and the 1976 National Emergencies Act (NEA) were ultimately intended to limit the scope of the president's authority under TWEA.
From a constitutional perspective, the majority also found that interpreting IEEPA to authorize the president's tariffs ran afoul of the "major questions doctrine," which requires clear congressional authorization before the president may undertake actions of vast economic and political significance. The majority remarked that the projected "economic impact of the tariffs is predicted to be many magnitudes greater than the two programs that the Supreme Court has previously held to implicate major questions." The majority indicated that the government's argument resembled one that had been expressly rejected by the Supreme Court in Biden v. Nebraska, 600 U.S. 477 (2023), where the Court concluded that Congress' authorizing the secretary of the U.S. Department of Education to "waive or modify" laws and regulations concerning student debt did not encompass student debt relief.
In a concurring opinion, three judges who joined the majority's opinion wrote separately to argue that IEEPA providing the president the power to "regulate" imports does not include a power to impose tariffs at all, arguing that neither the plain text of IEEPA nor precedent supports this interpretation.
Four dissenting judges argued that IEEPA "embodies an eyes-open congressional grant of broad emergency authority in this foreign-affairs realm" to include tariffs and rejected the majority's position that any tariffs authorized under IEEPA must be subject to limitations in scope, length and breadth. Congress, according to the dissenting judges, drafted IEEPA broadly to empower decisive presidential action in foreign affairs and, as such, the major questions doctrine should not apply to presidential action. The dissent warned that the majority's interpretation unduly narrows the statute. The dissent also recognized the CIT's concern with interpreting president's authority to declare an "unusual and extraordinary" threat under IEEPA as entirely unreviewable, reiterating the CIT's view that the "strong protection of presidential discretion" does not preclude a court from finding an abuse of discretion with respect to a statute's substantive boundary. Citing the Supreme Court's recent decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), the dissent emphasized that judges are empowered to identify whether the president is acting within the confines set by Congress when implementing legislation, even in the realm of foreign affairs.
Next Steps
Looking ahead, several developments are on the horizon:
- The administration has petitioned the Supreme Court, requesting an expedited review given the national and economic significance of the matter. Specifically, the U.S. Department of Justice requested the Supreme Court to hold oral arguments in November 2025 and issue its decision by the end of the calendar year.
- In the meantime, the tariffs imposed under IEEPA remain legally enforceable, requiring importers to continue to assess their exposure and pay duties even as the legal status of these duties remains in limbo. Importantly, this court of appeals decision and any decision by the Supreme Court to hear the case do not impact tariffs imposed under separate statutory authorities, including Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.
- The Supreme Court has several options, including the following:
- It could decline review, requiring the CIT to revisit remedies in light of the Federal Circuit's vacatur and remand.
- It could affirm the lower court decisions finding the president's tariffs under IEEPA are unlawful, in which case the majority of tariffs the president has imposed would be eliminated and all IEEPA tariffs paid would be eligible for reimbursement.
- Conversely, the Supreme Court could find that IEEPA does confer tariff authority to the president, allowing the president to continue with his trade and tariff agenda.
- If it agrees to hear the case and determines that IEEPA does allow the president to impose tariffs under certain emergency circumstances, the Supreme Court could find some tariffs (e.g., the Trafficking and Immigration Tariffs) are consistent with IEEPA, while others (e.g., Reciprocal Tariffs) are not.
- It could rule that Congress must articulate what tariff authority, if any, the president has under IEEPA. Such a decision would further complicate matters given that the current Congress is unlikely to limit the president's authority to impose certain tariffs.
As this litigation continues, companies with a financial interest in the recovery of past tariff payments should preserve detailed payment records and account for the timing and deadlines for filing post-summary corrections and/or protests with U.S. Customs and Border Protection under 19 U.S.C. § 1514. Companies and clients should also closely monitor efforts by the Trump Administration to impose new tariffs that are more likely to withstand challenge.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
