Federal Circuit invalidates Trump’s IEEPA tariffs on global imports

In a landmark ruling, the U.S. Court of Appeals for the Federal Circuit has affirmed that the President lacks authority under the International Emergency Economic Powers Act (IEEPA) to unilaterally impose tariffs on imports. The decision, issued en banc on Aug. 29, strikes down a series of tariffs that President Donald J. Trump imposed earlier this year on goods from Canada, Mexico, China, and nearly every major U.S. trading partner.

The court emphasized that while IEEPA grants the President broad powers to regulate international economic transactions in times of declared national emergency, it does not authorize the imposition of tariffs or duties, a core power reserved to Congress under the Constitution. While the Federal Circuit affirmed the Court of International Trade’s (CIT) merits holding and declaratory relief, it vacated the CIT’s universal permanent injunction and remanded for further proceedings. The CIT must now reconsider the propriety and scope of injunctive relief. The court reversed and remanded the injunction by the CIT, temporarily keeping the tariffs in place through Oct. 14, providing the Trump administration with the opportunity to appeal the decision to the U.S. Supreme Court.

Background on the challenged tariffs

Shortly after taking office in January 2025, President Trump declared a series of national emergencies tied to drug trafficking and trade imbalances. Invoking IEEPA, he issued five executive orders:

• Southern border tariffs (EO 14194): 25% ad valorem duties on all products of Mexico
• Northern border tariffs (EO 14193): 25% duties on products of Canada (10% for energy products)
• China synthetic opioid tariffs (EO 14195): 10–20% duties on all Chinese-origin goods
• Reciprocal tariffs (EO 14257): A baseline 10% duty on nearly all global imports, with surcharges of up to 50% on certain countries
• Subsequent amendments: Tariff rates were repeatedly modified, especially against China (fluctuating from 10% to 125%), with corresponding changes to the Harmonized Tariff Schedule of the United States (HTSUS).

These tariffs, which the court dubbed the “Trafficking Tariffs” and “Reciprocal Tariffs,” were sweeping in scope and indefinite in duration. Small businesses and a coalition of 12 states challenged the legality of these orders at the CIT. On May 28, the CIT enjoined the tariffs, holding that they exceeded presidential authority under IEEPA. The Federal Circuit paused this injunction while it reviewed the case pursuant to the Government’s swift appeal.

The Federal Circuit’s decision

Deciding on the government appeal, the Federal Circuit, recognizing the “exceptional importance” of the case, heard it en banc. In a 7–4 decision, the Court affirmed the CIT’s decision.

Majority opinion

• The court held that “regulate importation” under IEEPA does not mean “impose tariffs.”
• Tariffs are a form of taxation, and the Constitution vests the taxing power squarely in Congress.
• Other trade statutes (e.g., Section 232 of the Trade Expansion Act, Section 201, and Section 301 of the Trade Act) explicitly reference duties and tariffs and include procedural safeguards and substantive limits. IEEPA contains no such language.
• The absence of tariff-specific terms in IEEPA reflects Congress’s intent to restrict, not expand, presidential power.

Dissent

• The dissent, joined by four judges, argued that the phrase “regulate importation” should be read broadly, particularly in the context of national emergencies, and could encompass tariff authority similar to “adjust imports” under Section 232.
• They warned that the majority’s ruling unduly narrows the President’s ability to respond swiftly to foreign threats.

Next steps

• The government is likely to seek Supreme Court review.
• Because the court stayed its decision until Oct. 14, importers must continue paying the challenged tariffs until that date (or until the Supreme Court intervenes).
• Importers should consult counsel to evaluate potential refund claims and compliance adjustments.

Conclusion

The Federal Circuit’s decision is a victory for importers, states, and constitutional limits on executive trade powers. It underscores that while the President has broad authority to regulate international economic transactions during emergencies, that authority does not extend to rewriting the tariff schedule, a function reserved for Congress.

If you have any questions regarding the content of this alert, please contact Mark Ludwikowski (mludwikowski@clarkhill.com; 202-640-6680), Kevin Williams (kwilliams@clarkhill.com; 312-985-5907), Aristeo Lopez (alopez@clarkhill.com; 202-552-2366), Kelsey Christensen (kchristensen@clarkhill.com; 202-640-6670), Laura M. Quesada (Lquesada@clarkhill.com; 202-240-0170), or other member of Clark Hill’s International Trade Business Unit.

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