Courts Invalidate President’s IEEPA Tariffs, But Stays Keep Duties on Imports—for Now

The US Court of International Trade and the US District Court for the District of Columbia have invalidated President Donald Trump’s actions imposing tariffs pursuant to the International Emergency Economic Powers Act of 1977; however, because the orders have been temporarily stayed, the tariffs remain in effect for now. These developments could have wide-reaching implications for importers, pending final resolution.

KEY TAKEAWAYS

• The ongoing litigation challenges tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which consist of 25% tariffs against Canada and Mexico, 20% tariffs against China, 10% global tariffs, and identified (though paused) reciprocal tariffs at varying rates (collectively, the IEEPA Tariffs).
• Tariffs imposed pursuant to trade investigations are not subject to the current litigation and remain in effect. These include 25% tariffs imposed under Section 232 of the Trade Expansion Act of 1962 on steel, aluminum, and derivative articles, as well as on automobiles and auto parts, and tariffs of varying amounts imposed on Chinese-origin goods pursuant to Section 301 of the Trade Act of 1974.
• The US Court of International Trade and the US District Court for the District of Columbia both struck down the IEEPA Tariffs, finding that the president exceeded his statutory authority under IEEPA in imposing the tariffs. The government immediately moved for a stay of the order, which would keep the tariffs in place during the litigation. The US Court of Appeals for the Federal Circuit granted a temporary, administrative stay while it considers whether to stay the orders during the pendency of the government’s appeal.
• Tariffs remain in effect for now. Unless and until the courts deny the government’s motion to stay, the tariffs remain in place.

Beginning in February, President Trump imposed tariffs on imports after declaring multiple national emergencies under the IEEPA. Private and blue state plaintiffs challenged the validity of the IEEPA Tariffs, filing multiple actions that are now in three separate courts: the Court of International Trade (CIT), the US District Court for the District of Columbia (DC District Court), and the US District Court for the Northern District of California. On May 28, the CIT found that the IEEPA Tariffs were unlawful and permanently enjoined their operation. The administration immediately appealed.

On May 29, the US Court of Appeals for the Federal Circuit administratively stayed the CIT’s order while it determines whether to stay the order during the pendency of appellate proceedings. On May 29, the DC District Court also found that the IEEPA Tariffs are unlawful and similarly stayed its decision for 14 days. This provides the US Court of Appeals for the District of Columbia Circuit an opportunity to determine whether to stay the order during the pendency of appellate proceedings in that court.

At present, the IEEPA Tariffs remain in place because of these stays. Importers should not automatically assume the courts will invalidate those tariffs on appeal—and so should be cautious about altering their supply chains before the appeal is resolved. Given the far-reaching significance of the issue—impacting billions of dollars in trade activity—and the multiple federal appellate courts involved, the legality of the IEEPA Tariffs appears destined for US Supreme Court review. The same applies to the elimination of the de minimis exception for imports under $800, which was also based on the president’s IEEPA authority and is similarly being challenged in court under separate litigation from the CIT and DC District Court opinions. The situation is fast moving, and circumstances could change quickly. But the appellate courts may continue to stay the lower court orders, in which case the IEEPA Tariffs will remain in place until the Supreme Court rules.

Also, it is important for importers to recognize that the US government has imposed other tariffs based on different legislative authority that are not currently being challenged. Tariffs imposed pursuant to trade investigations—for instance, Section 201, Section 301, and Section 232 tariffs—are unaffected by the ongoing litigation.

PRESIDENT IMPOSES TARIFFS UNDER IEEPA

The US imposes tariffs under a variety of authorities, and the ongoing litigation challenges only a portion of those tariffs. The two primary groups of tariffs are (1) tariffs imposed pursuant to trade investigations and (2) tariffs imposed under IEEPA. Only the second grouping, tariffs imposed under IEEPA, are being challenged.

IEEPA Authority

IEEPA grants the president authority to take certain measures to “deal with any unusual and extraordinary threat” to the national security, foreign policy, or US economy following a declaration of a national emergency. [1] If the president declares a national emergency, he may “regulate . . . importation or exportation of . . . any property in which any foreign county or a national thereof has any interest.” [2]

The administration asserts that IEEPA authorizes the president to impose the tariffs. Since IEEPA’s passage in 1977, presidents have declared 69 national emergencies under the law. The declared emergencies have responded to political repression, corruption, human rights abuses, and attempts to undermine the democratic process. Notwithstanding those declared emergencies, no prior president has relied on IEEPA to impose tariffs. [3] Instead, IEEPA has historically been used to impose sanctions on individuals or foreign states, freeze or control assets, or restrict financial transactions. The administration asserts that IEEPA authorizes the president to impose the tariffs based on the broad congressional delegation to regulate importation following the declaration of a national emergency.

Worldwide, Reciprocal, and Trafficking Tariffs

On February 1, 2025, President Trump issued Executive Orders 14193, 14194, and 14195, invoking IEEPA to impose tariffs on Canada, Mexico, and China (Trafficking Tariffs). Each order declared a national emergency under IEEPA pertaining to unlawful migration and illegal drugs crossing the United States’ northern and southern borders and synthetic opioids entering the United States from China. The orders imposed tariffs of 25% on most goods of Canadian and Mexican origin, with lower rates of 10% for Canadian energy and energy resources and Canadian and Mexican potash. The trafficking tariffs on China were initially 10% and later increased to 20%. The president has modified and amended the trafficking tariffs several times since February.

On April 2, 2025, President Trump issued Executive Order 14257, which invoked IEEPA to impose a 10% ad valorem tariff on “all imports from all trading partners” (the Worldwide Tariffs), with higher rates (up to 50%) for certain countries (the Reciprocal Tariffs). The order concluded that there was a national emergency with respect to a “lack of reciprocity” in trade and US trading partners’ “economic policies that suppress domestic wages and consumption,” reflected in large annual trade deficits with those countries. On April 9, 2025, the president issued Executive Order 14266, pausing the Reciprocal Tariffs until July 9, but the 10% Worldwide Tariffs and the Trafficking Tariffs remain in effect.

For more on the background of the tariffs, we invite you to revisit our previous publications, including:

• Trump’s Second-Term Tariff Agenda: How Will New Tariffs Impact You? (January 31, 2025)
• Global Implications of the US Administration’s Tariff Strategy (March 31, 2025)
• Reciprocal Tariffs Affect Most Products from Nearly All Trading Partners (April 7, 2025)
• De Minimis Exception Eliminated for Imports from China (May 1, 2025)

States and Businesses Challenge the Tariffs

Several small businesses challenged the Worldwide and Reciprocal Tariffs, while Oregon and 11 other states also challenged the Worldwide, Reciprocal, and Trafficking Tariffs. These CIT consolidated the cases, finding that it has exclusive jurisdiction to hear cases concerning laws imposing tariffs pursuant to 19 USC § 1581(i). Several other small businesses challenged the IEEPA Tariffs in Learning Resources Inc. v. Trump in the DC District Court. [4]

For more on the state lawsuits, see our previous publication State Attorneys General Challenge President’s Tariff Authority Under IEEPA (May 19, 2025).

CIT ENJOINS IEEPA TARIFFS, BUT FEDERAL CIRCUIT STAYS THE ORDER, KEEPING TARIFFS IN EFFECT

On May 28, 2025, a three-judge CIT panel unanimously held that the IEEPA Tariffs “exceed any authority granted to the President by IEEPA to regulate importation” and enjoined them. [5] It first concluded that if IEEPA authorized the Worldwide and Reciprocal Tariffs, such authorization constituted an impermissible delegation of legislative power. But it also concluded that IEEPA did not authorize the IEEPA Tariffs because the Worldwide and Reciprocal Tariffs are meant to address balance of trade problems, which are not an emergency under IEEPA, and because the Trafficking Tariffs do not “deal with” the declared emergency of migrant and drug trafficking.

The CIT decision determined that IEEPA does not “delegate unbounded tariff authority to the President,” though the CIT did not go so far as to say that the president may not impose tariffs under IEEPA authority in any circumstance. The CIT’s opinion applies nationally, with the opinion stating that an injury to the named plaintiffs is an injury to all.

Non-Delegation Doctrine Prevents Delegation of Unlimited Tariff Authority

The CIT first concluded that if IEEPA grants the president the authority to impose these tariffs, as the government argued, it would constitute an impermissible delegation of legislative power from the US Congress to the president. The Constitution vests “all Legislative powers herein granted” to Congress, including the power to “law and collect Taxes, Duties, Imposts, and Excises.” The “non-delegation doctrine” provides that Congress may not delegate its legislative power to another body. But Congress may delegate non-legislative authority—the power, in the words of Chief Justice John Marshall, “to fill up the details.” [6] And the Supreme Court has upheld very broad delegations of authority, provided Congress includes an “intelligible principle” to guide discretion. [7]

The court reasoned that, on the government’s reading of IEEPA, the president could impose a tariff of any size on any country for any period. On this interpretation, IEEPA is an unconstitutional delegation of “unlimited tariff authority” because it does not impose any meaningful constraint on presidential discretion. [8]

IEEPA Does Not Authorize the Worldwide and Reciprocal Tariffs as Trade Deficits Are Not Emergencies Under IEEPA

The court next held that IEEPA does not authorize the Worldwide and Reciprocal Tariffs. Having concluded that on the government’s reading, IEEPA would constitute an impermissible delegation of legislative authority, the court preferred a reading that makes the statute constitutional rather than unconstitutional. And the court suggested that the government’s reading of IEEPA ran afoul of the “major questions doctrine,” because, even if Congress intended to delegate such broad power to the president, it did not clearly do so in IEEPA.

The court then discussed the 1975 case United States v. Yoshida International, which considered a challenge to President Richard Nixon’s imposition of a 10% tariff to address a “severe and worsening balance of payments deficit.” [9] Nixon declared a national emergency under the Trading with the Enemy Act (TWEA), a precursor statute to IEEPA, and imposed a 10% tariff on essentially all imports. Like IEEPA, TWEA permits the president to “regulate . . . importation.” In upholding the 10% tariffs, Yoshida concluded that the TWEA permitted the president to impose tariffs, although it did not grant him an “unlimited power” to do so.

The court in Oregon denied that IEEPA authorizes the president to “impose whatever tariff rates he deems desirable.” Even though the provision of IEEPA permitting the president to “regulate” imports mirrors the same provision in TWEA, the court concluded that IEEPA grants the president narrower authority than TWEA. It looked at IEEPA’s legislative history, describing IEEPA authority as “more limited in scope” than in TWEA. It also observed that Section 122 of the Trade Act of 1974, enacted a few years before IEEPA, permits the president to impose “restricted tariffs” in response to “‘large and serious balance-of-payments deficits.’” This alternative grant of authority “thereby limit[s] any such authority in the broader emergency powers under the IEEPA.”

The court then held that IEEPA does not authorize the Worldwide and Reciprocal Tariffs because they address these “balance-of-payment deficits,” which are not a basis for a national emergency under IEEPA. Instead, the president may impose tariffs in pursuit of this objective only under Section 122, which limits tariffs to 15% for a duration of 150 days. [10] Because the Worldwide and Reciprocal Tariffs do not end after 150 days, and some of them exceed 15%, they are also inconsistent with Section 122. Thus, the Worldwide and Reciprocal Tariffs have no statutory basis and are unlawful.

IEEPA Does Not Authorize the Trafficking Tariffs Because They Do Not ‘Deal With’ an Unusual and Extraordinary Threat

The court also concluded that IEEPA does not authorize the Trafficking Tariffs, but for a different reason. IEEPA provides that the president may exercise his emergency authority only to “deal with” the unusual and extraordinary threat with respect to the declared national emergency. [11]

The court rejected the government’s argument that whether the president’s action “deals with an unusual and extraordinary threat” is a non-justiciable ‘political question.’ Instead, IEEPA conditions presidential discretion to declare an emergency on “factors that the court retains the power to review.” The court did not reach the question of whether migrant and drug trafficking is an unusual and extraordinary threat. Instead, it concluded that the Trafficking Tariffs do not “deal with” the problems of migrant and drug trafficking across the US border, the declared national emergency giving rise to the Trafficking Tariffs. The government argued that imposing the Trafficking Tariffs induces Canada, Mexico, and China to stop drug trafficking into the United States.

The court disagreed, holding that the use of tariffs to create leverage to “deal with” migrant and drug trafficking does not fit with the IEEPA’s text. Indeed, the court reasoned, the president could invoke any power under IEEPA with the same justification. Instead, to “deal with” a threat means that the action taken directly addresses the threat, rather than creating leverage or putting pressure to achieve a desired outcome.

Having concluded the IEEPA Tariffs are unlawful, the CIT vacated and permanently enjoined the operation of the relevant executive orders.

Status of the Spring 2025 Tariffs

Appeal to the Federal Circuit and Likely Appeal to Supreme Court

The administration appealed the case to the US Court of Appeals for the Federal Circuit. And the losing party at the Federal Circuit is likely to appeal to the Supreme Court. In the meantime, the Federal Circuit temporarily stayed the CIT’s permanent injunction against the IEEPA Tariffs. A stay halts the effect of the decision while the parties appeal the matter. It is meant to preserve the status quo—normally, conditions as they existed before litigation. The Federal Circuit (and then the Supreme Court) may continue to stay this decision pending appeal while it resolves the case. The outcome at the Supreme Court remains to be seen. Although the Court might rule decisively one way or the other, a split decision that holds some of the IEEPA Tariffs lawful and others unlawful is also possible.

Potential Refund Mechanism for Importers

If the courts ultimately invalidate the IEEPA Tariffs, importers that have paid these duties may be entitled to refunds with interest. The legal mechanism for such refunds would likely follow the process outlined in 19 USC § 1520(a), which authorizes refunds of duties paid in error.

Importers would typically need to file protests within 180 days of liquidation under 19 USC § 1514, though the courts could potentially order US Customs and Border Protection (CBP) to establish a streamlined process given the extraordinary circumstances. For entries that have not yet liquidated, CBP could suspend liquidation pending final resolution of the case, as was done during litigation over the Section 232 steel and aluminum tariffs.

US importers of record should carefully document all IEEPA Tariffs paid to preserve refund rights.

Second Court Strikes Down the Tariffs—But Also Stays Its Order

The day after the CIT’s decision, the DC District Court reached the same conclusion—but with different reasoning—in Learning Resources Inc. v. Trump. [12] The plaintiffs, toy companies that primarily manufacture products in Asia, sought a preliminary injunction against the IEEPA Tariffs. The court determined that it, and not the CIT, has jurisdiction over the lawsuit.

The court held that the plaintiffs had shown a high likelihood of success on the merits because IEEPA does not authorize the president to impose tariffs at all. While this determination is broader than the CIT, the opinion is narrower in that it applies only to the named plaintiffs. The court concluded that the power to “regulate” granted in IEEPA does not include the power to impose taxes, including tariffs, nor is there any residual provision granting presidential authority beyond what is listed. Article I of the Constitution, the court observed, refers separately to the power to regulate and the power to tax.

Chief Justice Marshall similarly distinguished between the powers in Gibbons v. Ogden. The court noted that “regulate” and “tax” have different dictionary definitions and are used differently in federal statutes. And practice suggests the same because no president has used IEEPA to impose tariffs. The court granted the plaintiffs a preliminary injunction but stayed the operation of the injunction until June 12, 2025.

IMPACT OF TARIFF LITIGATION AND THE FUTURE OF TARIFFS

The CIT ruling is national in scope and would be immediately effective, but for the Federal Circuit’s administrative stay of the CIT injunction. This means that the IEEPA Tariffs remain in full effect. The administrative stay is temporary and does not address the merits of the stay motion itself. It simply preserves the status quo while the Federal Circuit considers the government’s full motion for a stay pending appeal. Plaintiffs must respond to the government’s motion for stay by June 5, after which the government has until June 9 to reply. The parties must also notify the Federal Circuit of any ruling on the parallel stay motion pending before the CIT. Given the nature of these cases and the administrative burden of pausing, refunding, and potentially recollecting duties paid, we expect that the stay will be granted pending appeal. We further expect that the party losing at the Federal Circuit will appeal to the Supreme Court.

One question lurking in the background of this litigation pertains to the withdrawal of de minimis treatment for Chinese-origin low-value shipments, which was originally announced in Executive Order 14195. The CIT invalidated that order, along with any amendments and modifications thereto, which would effectively invalidate the elimination of de minimis treatment for Chinese-origin goods, as well as the IEEPA Tariffs. Separate litigation is underway, challenging the elimination of de minimis treatment, which would be moot if the orders eliminating de minimis are invalidated. Neither the CIT nor the DC District Court addressed the elimination of de minimis beyond a cursory note regarding its removal.

Modification of the Tariffs and Alternative Statutory Bases

In response to this litigation, the president could modify the tariffs to satisfy the courts’ interpretation of the IEEPA. The approach might turn on the outcome of the litigation. If the courts hold that IEEPA permits tariffs—but not these tariffs—then the president might be able to modify the tariffs to make them lawful. If the courts ultimately hold that IEEPA does not permit the imposition of tariffs at all, then the president would have to seek an alternative legal basis for the tariffs. The president might issue new executive orders to claim a different legal basis for the tariffs. The president also retains some authority to impose tariffs in a narrower sense—possibly under the Tariff Act of 1930 or the Trade Act of 1974—and it remains to be seen whether he may exercise those authorities.

There are other tariff actions that are not affected by the ongoing litigation and remain in effect. These are actions imposed pursuant to trade investigations under Sections 201 and 301 of the Trade Act and Section 232 of the Trade Expansion Act of 1962. Such actions may be expanded or relied on more heavily depending on the outcome of the IEEPA Tariffs litigation.

See our prior LawFlash for an overview of the various tools the administration has at its disposal to impose tariffs, including those for unilateral executive action and trade investigations.

HOW WE CAN HELP

Our global trade team is closely monitoring these developments and can assist clients with the following:

• Strategic planning for various legal outcomes, including potential refund claims if the IEEPA Tariffs are ultimately invalidated
• Evaluating alternative sourcing options and supply chain restructuring to mitigate tariff exposure
• Preparing exclusion requests under any new tariff regimes that may replace the IEEPA Tariffs
• Representing clients in seeking CBP guidance, including concerning tariff classification, country of origin, and valuation
• Engaging with relevant government agencies in both the United States and globally to advocate for client interests

Our global offices can provide real-time updates on worldwide responses to US trade actions. This cross-border capability allows us to offer comprehensive solutions that account for both US and foreign legal and regulatory considerations.

The rapidly evolving status of the tariffs creates significant business risk and uncertainty for impacted clients. Our lawyers stand ready to advise clients in all aspects of contract negotiation and litigation, and we are well positioned to advise clients on negotiating contract language to address tariff risks and handle supply chain litigation.

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Government Relations Manager David Mendelsohn and law clerk Michael Polito contributed to this LawFlash.