IEEPA Tariffs at a Crossroads: Courts Intervene, What Comes Next?

Last week, two different district courts found that President Donald Trump did not have the authority under the International Emergency Economic Powers Act (“IEEPA”) to impose sweeping tariffs. 

On May 28, 2025, the United States Court of International Trade, (“CIT”) sitting in a three-judge panel, granted summary judgment in favor of a coalition of states and businesses challenging the President’s imposition of tariffs under the International Emergency Economic Powers Act (“IEEPA”). The CIT held that the tariffs exceeded the statutory authority delegated to the President and violated constitutional principles governing the separation of powers and congressional delegation. On May 29, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) stayed the CIT’s order, and requested that the plaintiff-appellees, a coalition of businesses and state attorneys general file a response to the government’s appeal by June 5. The government’s reply is due June 9.

On May 29, 2025, the U.S. District Court for the District of Columbia (“DDC”) also issued a preliminary injunction against the President’s IEEPA tariffs in response to a case brought by small businesses that import educational products, who argued that the President’s use of IEEPA to unilaterally impose tariffs on goods from China and other countries exceeded his statutory authority and threatened their survival.  The DDC initially stayed the order for 14 days, but has now stayed the order indefinitely while the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Cir.”) considers the Trump Administration’s appeal and request for a stay. The D.C. Cir. has requested that the companies challenging the President’s order should file a response by June 4, and the Government has until June 6 to reply.

Background

The litigation arises from a series of Executive Orders (“E.O.s”) issued by the President that invoked IEEPA to impose significant tariffs on imports from Canada, Mexico, China, and a long list of other countries around the world (the so-called, Liberation Day tariffs). The CIT decision focuses on the following tariffs:

• The “Trafficking Tariffs,” (also referred to as the IEEPA-fentanyl tariffs) which stem from three E.O.s issued in February 2025, to address threats from international cartels, drug trafficking, and related cross-border criminal activity related to the fentanyl trade in Canada, Mexico, and China. These orders ultimately resulted in a 25% tariff on Canadian and Mexican products that did not qualify under the United States-Mexico-Canada Agreement (10% for certain energy, energy resources, and potash imported from Canada) and a 20% tariff on Chinese products.
• “Worldwide and Retaliatory Tariffs,” (also referred to as the “reciprocal” or “Liberation Day” tariffs) which stem from E.O. 14257, dated April 2, 2025, titled “Regulating Imports With A Reciprocal Tariff To Rectify Trade Practices That Contribute To Large And Persistent Annual United States Goods Trade Deficits.” These tariffs included a “flat rate” reciprocal tariff of 10% on all imports, with exemptions and higher rates (up to 50%) for 57 countries. These “reciprocal” tariffs were justified as a response to persistent U.S. trade deficits and alleged unfair trade practices. China was initially subject to 34% tariffs under the original order; however, in response to China’s retaliatory actions, the tariffs were raised to 84% and subsequently 125%. Following further discussions and developments, the President later reduced the China-specific rate back down to 10%.

Key Findings by the CIT

The CIT made three noteworthy conclusions as to the Trump Administration’s “Worldwide and Retaliatory Tariffs.” First, the CIT found the President’s power under IEEPA to “regulate . . . importation” “does not authorize anything as unbounded as the Worldwide and Retaliatory Tariffs.” Second, the CIT found that reading the words “regulate . . . importation” in IEEPA “as authorizing the President to impose whatever tariff rates he deems desirable” would create an unconstitutional delegation of power. Third, the CIT found that while the Trading with the Enemy Act (“TWEA”) and IEEPA both grant the President the power to “regulate . . . importation,” the legislative history of IEEPA supports that Congress delegated narrower authority to the President under IEEPA than TWEA.

The CIT also found that IEEPA does not authorize the “Trafficking Tariffs” as their related Executive Orders do not “satisfy the statutory requirement that IEEPA powers be exercised only to ‘deal with an unusual and extraordinary threat’” (emphasis added). Specifically, the CIT found that, despite the “considerable deference” accorded to the executive branch as to foreign policy, the tariffs—imposed as leverage to induce foreign governments to address trafficking and related criminal activity—did not “deal with” the identified threats outlined in their respective executive orders in the manner required by IEEPA.   

Finally, the CIT found “exclusive jurisdiction” over the challenges under 28 U.S.C. § 1581(i) and that both business and state plaintiffs had Article III standing based on direct and indirect economic injuries resulting from the tariffs.

Key Findings by the DDC

The central question before the court was whether IEEPA authorizes the President to impose tariffs. The government contended that the President’s power to “regulate” importation under IEEPA included the authority to set tariffs, particularly in response to declared national emergencies affecting national security or the economy. The government also argued that CIT has exclusive jurisdiction that necessitates the transfer of the case to the CIT.

The DDC concluded that IEEPA does not authorize the President to unilaterally impose tariffs, and that the President acted without necessary authority. The Court also determined that the case properly remained in the D.D.C, not the CIT, because IEEPA is not a law “providing for tariffs.” The court granted a preliminary injunction, blocking the government from collecting the challenged tariffs from the plaintiffs – but only the plaintiffs; the injunction does not block the government from imposing the tariffs as to other parties.  It found that the small businesses faced irreparable harm, including existential threats to their operations, and that the balance of equities and public interest favored relief. 

In its analysis, the court examined the text of IEEPA, its legislative history, and the constitutional framework.  The court found that IEEPA does not mention “tariffs,” “duties,” or similar terms, and that the authority to “regulate” importation does not equate to the power to tax or impose tariffs.  The Constitution assigns Congress the separate powers to levy taxes and duties and to regulate commerce, and the court emphasized that any delegation of taxing authority to the President must be clear.  Historically, IEEPA and its predecessor statutes have been used for targeted economic sanctions rather than broad-based tariffs, and when Congress has authorized presidential tariff action in other statutes, it had imposed clear procedural and substantive limits. The court also rejected the government’s reliance on older case law interpreting similar language more broadly, noting that modern statutory interpretation focuses on the plain meaning of the text.

What’s Next and Other Considerations

• The Federal Court has administratively stayed the CIT’s order while it considers the government’s motion to stay pending the appeal.
• If the opinion and order are affirmed on appeal, we expect all IEEPA-fentanyl and “reciprocal” duties collected since February 2025 will be refunded. The CIT’s order does not impact tariffs imposed under other tariff authorities like Section 232 or Section 301.
• The Government’s request for a stay of the CIT’s permanent injunction at CAFC focused on the role of judiciary, and argued that (1) the injunction unlawfully interferes with the President’s authority to conduct foreign policy and protect national security, particularly during ongoing sensitive trade negotiations with multiple countries, (2) prior decisions by the CAFC’s predecessor appeals court authorized tariffs using the same statutory language, and (3) that Congress took that into account when enacting IEEPA. Thus, the request asserted that IEEPA clearly authorizes the President to impose such tariffs and stated that any harm to plaintiffs could be remedied through refunds, with interest, if the tariffs are ultimately found unlawful.
• The coalition of businesses and state attorneys general must file a response to the government’s appeal by June 5. The government’s reply is due June 9.

• The DDC stayed its order indefinitely as the D.C. Cir. considers the President’s appeal and request for a stay of the district court’s order. In response to the Government’s request, the appeals court has given the companies challenging the President’s order until June 4 to file a response, and the Government has until June 6 to reply.
• The President could move to impose alternative tariffs under other statutory provisions. The above findings by the CIT only pertain to the President’s authority under IEEPA.
• If the IEEPA cases make it to the Supreme Court, the CIT has teed up big questions about the role of the Judiciary, the power of the President, and limits on Congress’s delegation of powers. In addition, a number of recent national security authorities (such as the U.S. Department of Justice’s Data Security Program, and the Commerce Department’s Supply Chain ICTS and Connected Vehicle rules) are rooted in IEEPA and may be impacted by rulings in these cases, as well as the more traditional uses of IEEPA for sanctions and other national security related executive branch actions. 
• Companies importing merchandise should closely monitor further developments, including the state of appeals, as tariffs rates could continue to change rapidly.