Federal circuit stays decision invalidating Trump tariffs

President Trump’s imposition of tariffs following declarations of national emergencies under the International Emergency Economic Powers Act of 1977 (“IEEPA”), multiple lawsuits have challenged the President’s authority to do so. One of these lawsuits resulted in a permanent nationwide injunction against IEEPA-based tariffs. That injunction has been stayed by the US Court of Appeals for the Federal Circuit, which continued the stay pending appeal. At this time, it is difficult to predict how the appellate courts will ultimately resolve these issues.

On May 28, 2025, the US Court of International Trade (“CIT”) found that President Trump did not have authority under IEEPA to impose these tariffs. While the opinion noted that the President has authority to impose tariffs on other statutory grounds, it found that reading an unlimited delegation of tariff authority to the President under IEEPA would be unconstitutional. The following day, the US District Court for the District of Columbia (“DDC”) similarly found that IEEPA’s grant of the power to block property and regulate trade does not include the power to impose tariffs. Although both courts held that the tariffs were unlawful, the CIT’s injunction would have a national effect, while the DDC’s injunction would be limited to the two plaintiffs in that case.

Both decisions were immediately appealed, and both injunctions were stayed pending appeal.

Background

On January 20, 2025, the date of his inauguration, the President declared national emergencies at the southern border with regards to “cartels, criminal gangs, known terrorists, human traffickers, smugglers, unvetted military-age males from foreign adversaries, and illicit narcotics that harm Americans” and under IEEPA to counter threats posed by international cartels.¹ Next, on February 1, 2025, the President expanded the national emergency by Executive Orders (“EOs”) to include the flow of illicit drugs across the northern and southern borders, and from China.² Those EOs imposed 25% tariffs on merchandise originating from Canada and Mexico, and 10% on those from China, in addition to a 10% tariff on energy and energy resources from Canada.

Tariffs targeting China were later increased from 10% to 20% on March 3 by another EO,³ and those targeting Mexico and Canada were postponed to take effect on March 4, 2025.⁴ After initially providing for duty-free $800 de minimis treatment for otherwise covered merchandise,⁵ this treatment was removed with regards to products from China on April 2.⁶ Further, the duty rate on potash from Canada and Mexico was lowered to 10% on March 6.⁷ Presently, these tariffs—referred to as “Trafficking Tariffs” since they were in response to national emergencies involving trafficking—are set at 25% for Mexican and Canadian products and at 20% for Chinese products. The tariffs on Canadian energy and energy resources remain at the lower 10% rate.

On April 2, 2025, the President declared a national emergency under IEEPA with respect to “underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits.”⁸ In response, via another EO, the President imposed a 10% universal tariff on all imports from all trading partners, with increased percentages of up to 50% for 57 countries.⁹ Then, on April 9, 2025, he suspended the implementation of the increased tariffs on all countries besides China to July 9, 2025.¹⁰ Instead, following China’s responses to the tariff adjustments, the China-specific tariff was increased to ultimately 125%,¹¹ before lowering it to 10% on May 12, 2025, for three months until August 12, 2025.¹² These tariffs are collectively referred to as the “Worldwide and Retaliatory Tariffs.”

Legal Challenges

In response these tariffs, various private business from different states, including a New York wine importer and distributor, jointly filed a lawsuit against the Government in the CIT on April 14, 2025, challenging the Worldwide and Retaliatory Tariffs, which was then joined with a separate suit initiated by 12 States on April 23, 2025, in response to both the Worldwide and Retaliatory Tariffs as well as the Trafficking Tariffs (the “V.O.S. Action”).¹³

In parallel, on April 16, 2025, California and Gavin Newson sued the Government on April 16, 2025, in the United States District Court for the Northern District of California to enjoin and declare the Trafficking Tariffs and the Worldwide and Retaliatory Tariffs as unlawful (the “California Action”).¹⁴ On April 22, 2025, several educational toy companies sued the Government in the DDC to specifically challenge the tariffs as they pertain to China (“Learning Resources”).¹⁵ Similarly, on May 29, 2025, a skincare startup sought to commence a class action against the United States with regards to these tariffs after it had to pay $26,911 in duties to import a machina valued at $15,830.16

The V.O.S. Action was decided on May 28, 2025, and is currently on appeal before the Federal Circuit Court.¹⁷ On May 29, 2025, the DDC asserted jurisdiction and granted a preliminary injunction in Learning Resources, which was appealed to the DC Circuit Court on May 30, 2025.¹⁸ On June 2, 2025, the California Action was dismissed without prejudice—after it found that the action fell within the CIT’s exclusive jurisdiction—a decision that is currently on appeal before the Ninth Circuit Court.¹⁹

V.O.S. Action

The CIT is a federal court established under Article III of the US Constitution with nationwide and exclusive jurisdiction over civil actions arising out of the customs and international trade laws of the US, including tariffs. The court has jurisdiction to review the implicated EOs since they made amendments to the US Harmonized Tariff Schedule (“HTSUS”), which sets tariffs. Nine judges sit in the court, which are appointed by the President subject to confirmation by the Senate, of which no more than five can be from the same political party. The three-judge panel rendering the May 28 decision were appointed by Presidents Reagan, Obama, and Trump, respectively.

In the V.O.S. Action, both the private plaintiffs and the US states argued that IEEPA does not authorize the President to circumvent Congress and unilaterally impose tariffs. The private businesses allege that they are suffering economic injuries based on the tariffs, noting reduced cash flow and increased difficulties with sourcing and pricing. Similarly, the states allege direct financial harm based on the tariffs’ impact on the importation of goods essential to the states’ provision of public services as well as their ability to procure goods and services and to budget for and audit price adjustments.

The CIT first noted that the President’s authority to impose tariffs under IEEPA can be found under §§ 1701 and 1702. It found that § 1701’s authority only extends to “unusual and extraordinary threat[s] with respect to which a national emergency has been declared” and concluded that the trafficking tariffs fell outside its scope. The lack of “any identifiable limits” in the worldwide and retaliatory tariffs placed it similarly outside of § 1702’s limited delegation from Congress to the President.

The CIT applied the nondelegation and major questions doctrines to hold that an unlimited delegation of tariff authority would be unconstitutional. The CIT relied on its previous interpretation of the 1917 Trading with the Enemy Act (“TWEA”) where it held that “[t]he mere incantation of ‘national emergency’ cannot, of course, sound the death-knell of the Constitution” and allow “the President to rewrite the tariff schedules.” United States v. Yoshida Int’l. Inc., 526 F.2d 560, 584 (C.C.P.A. 1975). However, in Yoshida, the tariffs imposed by then-President Nixon were ultimately upheld on the basis that they were limited. Moreover, the CIT reviewed legislative history and found that the authority delegated by Congress through IEEPA was narrower than what was delegated through TWEA. It noted that the President’s authority to impose tariffs have been set out in various other Acts.

While the CIT concluded that President Trump’s imposition of the trafficking, worldwide, and retaliatory tariffs were beyond the scope of its authority under IEEPA, and issued a nationwide injunction against their effect, it also clarified the extent to which Congress has delegated the authority to impose tariffs.

• Section 122 of the 1974 Trade Act, dealing with remedies for balance-of-payments deficits, provides that the President can impose temporary import surcharges (through tariffs) and limitations (through quota) within limits. This Section places a 15% cap on tariffs for at most 150 days.
• Under Section 232 of the 1962 Trade Expansion Act, the President can take action to adjust imports after the Secretary of Commerce finds that an article is being imported in such quantities or under such circumstances as to threaten to impair the national security.
• Section 301 of the 1974 Trade Act, in turn, provides that the US Trade Representative may impose tariffs after it determines that an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts US commerce. However, this can only be done following an investigation that culminates in an affirmative finding that another country imposed unfair trade barriers and a public notice and comment period.

Learning Resources

In Learning Resources, two educational toy companies importing products from China claimed that (i) the Tariffs were unauthorized by IEEPA, (ii) the implementation violated the Administrative Procedure Act (“APA”), and (iii) even if the Tariffs were authorized by IEEPA, they violated the nondelegation doctrine, see supra. The Government sought to transfer the action to the CIT, arguing that it has exclusive jurisdiction over the dispute, and the plaintiffs instead sought a preliminary injunction preventing the collection of tariffs. Such a preliminary injunction would be vis-à-vis the plaintiffs only, unlike the national effect of the CIT decision.

Interestingly, after recognizing that the CIT has exclusive jurisdiction over civil actions against the Government arising under a law providing for tariffs, the DDC held that this dispute did not fall within the CIT’s exclusive jurisdiction since IEEPA is not a law providing for tariffs.²⁰ Rather, it found that the statute only authorizes the President to block property and regulate trade, which does not include the power to impose tariffs based on dictionary definitions and Gibbons v. Ogden.²¹ In reaching this conclusion, the DDC noted that the jurisdictional question—i.e., whether the CIT has exclusive jurisdiction—was coextensive with the merits question—i.e., whether the President can impose tariffs under IEEPA. The DDC was unpersuaded by Yoshida, which is not binding authority since it is from a different Circuit, denied to transfer the case to the CIT, and granted the injunction sought.

In addition to the CIT’s analysis of the statutes under which Congress delegated authority to the President to impose tariffs, the DDC noted Section 338 of the Tariff Act of 1930, which grants the President the authority to “declare new or additional duties” of up to 50 percent for a maximum of 30 days on imports from countries that have imposed “unreasonable” charges, exactions, regulations, or limitations that are “not equally enforced upon the like articles of every foreign country,” or that have “[d]iscriminate[d] in fact against the commerce of the United States.”²² These delegations, the court found, are irreconcilable with a “virtually unrestricted tariffing power under IEEPA.”

The Court held that, since IEEPA does not authorize the Tariffs, the President’s imposition of them was ultra vires. Noting the likelihood of success on the merits of plaintiffs’ case on that front, in combination with the likelihood of irreparable injury suffered by plaintiffs because of the tariffs and the balance of equities and the public interest, the DDC imposed a preliminary injunction, suspending the collection of tariffs from the plaintiffs’ imports. This May 29, 2025, decision was appealed to the D.C. Circuit Court the following day and the preliminary injunction was stayed pending appeal. Unlike the CIT injunction, this injunction applied only to the parties with no nationwide appeal.

Appellate Proceedings and Next Steps

In the appeal of Learning Resources, the parties jointly filed a motion to expedite proceedings on the following timeline:

• June 27, 2025 – Defendants-Appellants’ Opening Brief due;
• July 23, 2025 – Plaintiffs-Appellees’ Response Brief due;
• August 8, 2025 – Defendants-Appellants’ Reply Brief due;
• Oral Argument should be scheduled for a special summer sitting or first date in September.

In the appeal of the V.O.S. Action, on June 10, 2025, the Federal Circuit Court granted the motion to stay the CIT decision pending appeal. In its decision on the motion the stay, the Court directed the parties to propose an expedited briefing schedule allowing the court to hold oral argument on July 31, 2025. It will hear the case en banc, which means that it will be decided by all circuit judges in regular active services who are not otherwise recused or disqualified.

Any final decision in either Learning Resources or the V.O.S. Action is likely to be appealed to the US Supreme Court. At this time, we do not expect the Supreme Court to consider the Federal Circuit’s decision on the motion to stay, even if the plaintiffs seek emergency review.

Conclusion

In the V.O.S. Action, the Government took the extraordinary step of submitting sworn declarations from four cabinet secretaries. One of the grounds on which the Administration is challenging the CIT decision is that the CIT allegedly did not even walk through the factors for imposing a permanent injunction. As such, the grounds on which the Presidents may or may not be able to impose tariffs under IEEPA will likely be revised when all of the litigation is resolved. However, at this stage, it is very difficult to say whether a particular theory of the President’s power will prevail, especially since the V.O.S. Action and Learning Resources appear to view the issue differently.

The US tariff regime continues to be in flux. Although the Federal Circuit has administratively stayed the CIT decision—and further review from the US Supreme Court may be sought—it is foreseeable that the Trump Administration may seek out alternative ways to impose tariffs, either through Congress or through the Trade Act and Trade Expansion Act.

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Footnotes

1. Proclamation 10886, 90 Fed. Reg. 8327 (Jan. 20, 2025); Executive Order 14157, 90 Fed. Reg. 8439 (Jan. 20, 2025).

2. Executive Order 14193, 90 Fed. Reg. 9113 (Feb. 1, 2025); Executive Order 14194, 90 Fed. Reg. 9117 (Feb. 1, 2025); Executive Order 14195, 90 Fed. Reg. 9121 (Feb. 1, 2025).

3. Executive Order 14228, 90 Fed. Reg. 11463 (Mar. 3, 2025).

4. Executive Order 14197, 90 Fed. Reg. 9183 (Feb. 3, 2025); Executive Order 14198, 90 Fed. Reg. 9185 (Feb. 3, 2025).

5. Executive Order 14226, 90 Fed. Reg. 11369 (Mar. 2, 2025); Executive Order 14227, 90 Fed. Reg. 11371 (Mar. 2, 2025); Executive Order 14200, 90 Fed. Reg. 9277 (Feb. 5, 2025).

6. Executive Order 14256, 90 Fed. Reg. 14899 (Apr. 2, 2025).

7. Executive Order 14231, 90 Fed. Reg. 11785 (Mar. 6, 2025); Executive Order 14232, 90 Fed. Reg. 11787 (Mar. 6, 2025)

8. Executive Order 14257, 90 Fed. Reg. 15041, 15045 (Apr. 2, 2025).

9. Id.

10. Executive Order 14266, 90 Fed. Reg. 15626 (Apr. 9, 2025).

11. Id.; Executive Order 14259, 90 Fed. Reg. 15509 (Apr. 8, 2025).

12. Executive Order 14298, 90 Fed. Reg. 21831 (May 12, 2025).

13. V.O.S. v. United States, No. 1:25-cv-66 (C.I.T. Apr. 14, 2025).

14. California v. Trump, No. 3:25-cv-3372 (N.D. Cal. Apr. 16, 2025).

15. Learning Resources Inc. v. Trump, No. 25-cv-1248 (D.D.C. Apr. 22, 2025).

16. Chapter1 LLC v. United States, No. 1:25-cv-97 (C.I.T. May 29, 2025).

17. V.O.S. v. United States, No 25-1812 (Fed. Cir. June 9, 2025).

18. Learning Resources Inc. v. Trump, No. 25-5202 (D.C.C. May 30, 2025).

19. California v. Trump, No. 25-3493 (9th Cir. June 3, 2025).

20. 28 U.S.C. § 1581(i)(1).

21. 22 U.S. (9 Wheat.) 1, 201, 6 L.Ed. 23 (1824) (Marshall, C.J.).

22. 19 U.S.C. § 1338(a), (d), (e).