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Two Federal Courts Invalidate “Reciprocal” and Other Emergency Tariffs, But Relief Paused Pending Appeal

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In a landmark decision, the U.S. Court of International Trade (CIT) has ruled against President Trump’s imposition of tariffs under the International Emergency Economic Powers Act (IEEPA). In its decision (involving two consolidated cases, V.O.S. Selections, Inc. et al. v. United States of America et al. and The State of Oregon et al. v. United States Department of Homeland Security et al.), the court emphasized that the Constitution assigns the authority to set import duties to Congress, and therefore the President’s power to impose tariffs must be located in specific statutes delegating that authority to the Executive. The CIT held that IEEPA cannot be read to grant the President such power.

As previously analyzed here and here, earlier this spring, President Trump issued a series of executive orders imposing tariffs under IEEPA on (1) imports from Canada, Mexico and China allegedly based on the flow of fentanyl and undocumented immigrants into the United States (referred to as fentanyl tariffs or the “Trafficking Tariffs”), and (2) imports from nearly every other country in response to “large and persistent” annual trade deficits in goods (known as reciprocal tariffs or the “Worldwide and Retaliatory Tariffs”). The court found both sets of tariffs violated the statute for their own reasons.

No Valid Emergency for Reciprocal Tariffs: The CIT first found that the President’s stated national emergency underpinning the so-called Worldwide and Retaliatory tariffs did not meet IEEPA’s statutory requirements. The court was not persuaded that persistent trade imbalances constituted a legitimate “emergency” as contemplated by the statute. The court noted that Congress “cabined” the President’s authority to impose tariffs in response to balance-of-payments deficits (which the court noted would apply with respect to trade deficits) to non-emergency legislation under Section 122 of the Trade Act of 1974 (“Section 122”), providing “specific limits” on the President’s use of that authority, and that the legislative history related to IEEPA indicates that IEEPA “does not include authorities more appropriately lodged in other legislation.”1

“Trafficking Tariffs” Too Indirect: Likewise, tariffs launched in February and March 2025 targeting China, Mexico and Canada did not survive the court’s scrutiny. Under IEEPA’s text, actions taken must be appropriate to “deal with an unusual and extraordinary threat,” i.e., the stated emergency. As the court stated, the phrase “‘deal with’ connotes a direct link between an act and the problem it purports to address.” The Government had argued that the “Trafficking Tariffs” (a 20% tariff on Chinese goods and 25% on non-USMCA compliant imports from Mexico and Canada) were intended to create “leverage” to pressure those countries to crack down on fentanyl production and improve border security. The CIT however found that actions taken pursuant to the cited emergency must “deal with” that emergency, “not create ‘leverage’ ostensibly to do so.”

Key Legal Doctrines Applied: The court emphasized constitutional limits on presidential trade powers. Relying on the nondelegation doctrine (under which Congress cannot delegate its authorities to other branches of government without an intelligible principle that limits the delegation) and major questions doctrine (under which Congress must “speak clearly when it wishes to assign to an agency decisions of vast economic and political significance”), it found the language in IEEPA allowing the President to “regulate … imports” did not provide clear authorization for sweeping tariffs nor could it override Congress’s primary role in setting revenue measures such as tariffs. The CIT granted Plaintiffs’ motion for summary judgment and issued a permanent nationwide injunction, ordering the government to stop collecting the tariffs and refund any such duties already paid by importers. It gave the Administration 10 days to implement this directive (e.g., issuing instructions to Customs and Border Protection to halt the tariffs).

Injunctions Paused as Appeals Move Forward
The legal and practical effects of the CIT’s ruling were almost immediately put on hold. The Justice Department requested a stay from the CIT, appealed the ruling to the U.S. Court of Appeals for the Federal Circuit, and also requested a stay from the appellate court. The appellate court granted an administrative stay of the CIT’s injunction while the CIT considers the government’s request. This stay means importers must continue paying the emergency tariffs pending a resolution of the Government’s motion for a more permanent stay of the CIT’s ruling during a full merits appeal.

In a parallel development, a separate group of importers and businesses challenged the same tariffs in the U.S. District Court for the District of Columbia (Learning Resources, Inc. v. Trump). On May 29, that court granted a preliminary injunction against the IEEPA tariffs, echoing the CIT’s view that the President’s actions likely exceeded his statutory authority.

The D.C. court’s injunction, however, was limited to the specific plaintiffs in that case (i.e., it was not a nationwide order). Moreover, the judge stayed his own injunction for 14 days, giving the Government time to appeal to the D.C. Circuit and seek further relief. The Justice Department has appealed this ruling as well, setting the stage for multiple appellate courts to weigh in on the scope of the President’s power to levy duties under IEEPA.

For now, the circumstances for importers and exporters remain status quo—the challenged tariffs under the February, March and April executive orders and related proclamations are still being collected at U.S. ports of entry. There are indications that the Trump administration may rely on other legal mechanisms to increase tariffs, but those mechanisms come with their own limits and procedural requirements.

Next Steps for Importers and Exporters
In light of these fast-moving developments, companies involved in international trade should stay agile and informed. Here are some practical action items and considerations:

Continue Business as Usual (for Now): Companies cannot assume immediate tariff relief. Despite favorable court rulings, the IEEPA tariffs are still in effect under the temporary stays. Importers must budget for and pay the 10% universal tariff and any applicable country-specific surcharges or “trafficking” tariffs until further notice from the courts or CBP. Even if the IEEPA tariffs are ultimately overturned, the administration still has access to other, alternative tariff authorities that could achieve similar trade policy objectives—albeit in a more targeted or delayed fashion.

Monitor the Appeals: The situation could change quickly. We will continue to provide updates from the Federal Circuit and D.C. Circuit appeals as well as any action before the U.S. Supreme Court. A successful appeal by the government could reinstate the tariffs long-term, whereas a denial of the stay or an appellate decision upholding the CIT decision could lift the tariffs and, eventually, allow a pathway to refunds of past payments. Close monitoring will help businesses anticipate if and when they might see duty rate changes and remain competitive.

In summary, the recent court rulings represent a pivotal—though potentially temporary—limit on presidential emergency tariff powers. Significant litigation will continue before a conclusive resolution of the underlying question of executive powers.

1 V.O.S. Selections, Inc. v. United States, Slip Op. 25-66 at 35-36, 1:25-cv-00066 (Ct. Int’l Trade May 28, 2025).

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