The U.S. Court of International Trade (CIT), a federal court with jurisdiction over civil actions arising out of the customs and international trade laws of the United States, recently ruled on the constitutionality of the Trump administration's issuance of tariffs against nearly all countries under the International Economic Emergency Powers Act (IEEPA). The three-judge court ruled unanimously that the IEEPA legislation does not "confer such unbounded authority and sets aside the challenged tariffs imposed thereunder." As such, the court ruled that the IEEPA tariffs would be permanently enjoined from various executive orders imposing the tariffs.
The Trump administration appealed, and the U.S. Court of Appeals for the Federal Circuit has issued a temporary stay on the CIT ruling.
In a separate case, the United States District Court for the District of Columbia ruled on June 2, 2025 that the IEEPA doesn’t authorize the president to declare tariffs, and therefore the CIT lacks jurisdiction to rule on the initial two cases. The District Court subsequently stayed its decision pending an appeal to the U.S. Court of Appeals.
At this time the ad valorem 25% “fentanyl and immigration” tariffs on Mexican and Canadian goods (with exemptions for USMCA-compliant goods and potash tariffs of 10%), the 20% “fentanyl” tariff on Chinese goods, and the 10% reciprocal tariffs on countries listed in Annex I (including China) remain in place until the Court of Appeals rules on the outstanding matters. This ruling may occur before the end of June. All other tariffs under Section 232 provisions and Section 301 provisions remain in force.
What we're tracking
- The U.S. Court of International Trade (www.cit.uscourts.gov) cases negating the IEEPA tariff V.O.S. Selections, Inc. v. Trump and State of Oregon v. Trump.
- The U.S. Court of Appeals for the Federal Circuit (www.cafc.uscourts.gov), where the administration filed its appeal. The plaintiffs need to file their briefs by June 5, 2025, and the U.S. Government must file its reply no later than June 9, 2025.
Why it's important
For now, companies will continue to pay the IEEPA tariffs applied to goods from Mexico and Canada that began on March 4, 2025, and China on February 4, 2025, along with the reciprocal tariffs (currently paused from May 14, 2025 to July 9, 2025) to a rate of 10% for the countries listed in Annex I.
The outcome of the Court of Appeals ruling will be significant because the administration could lose its authority to impose the reciprocal tariffs at the same time it’s conducting country-by-country trade negotiations to potentially modify them. A loss in the appeals court would force the administration to consider other authorities such as section 122 of the Trade Act of 1974 (Trade Act) that allows the president to initiate a temporary import surcharge not to exceed 15% for no more than 150 days unless extended by Congress, or additional section 232 and section 301 tariffs.
How it impacts you
While the current tariffs remain in place on appeal, documentation becomes increasingly important because if the IEEPA tariffs are overturned, U.S. Customs and Border Protection may be required to refund improperly collected tariffs.
What to expect next
The Court of Appeals will rule on the materials submitted and arguments made in the coming weeks, and a ruling is expected shortly thereafter.
The administration has been vocal about not backing away from imposing tariffs. Should the administration lose its IEEPA authority to impose tariffs, the Trade Act of 1974 appears to be the least cumbersome alternative to support widespread tariffs. And while the Trade Act’s section 122 15% limit is less than half of the rate currently imposed, it’s still significant at a 50% higher rate than the current 10% reciprocal rate being applied.
