Two Federal Courts Temporarily Strike Down President Trump’s IEEPA Tariffs

On May 28, 2025, the U.S. Court of International Trade (CIT) ruled that President Trump lacks authority under the International Emergency Economic Powers Act (IEEPA) to impose his most sweeping tariffs against U.S. trading partners. In a separate lawsuit, a federal judge for the U.S. District Court for the District of Columbia (D.D.C.) followed the next day with a narrower ruling blocking the same tariffs as applied to two small businesses.

The rulings—which cast doubt on the sweeping legal theory that the President has invoked to impose tariffs on much of the world—are a setback for President Trump’s trade agenda, but their near-term and long-term impact remains unresolved. The CIT ruling was soon stayed by its reviewing court, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), keeping the tariffs at issue in place for now. The D.D.C. ruling has also been stayed as the government appeals to the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). Even if one or both rulings are upheld on appeal, President Trump has other legal authorities at his disposal to try to impose similar tariff arrangements. But those alternative authorities come with limitations and restrictions and may open up other avenues for litigation.

At the end of the day, given the Administration’s willingness to change tariffs and tariff policies on a moment’s notice, companies are just as likely to see the next material development come from the White House, rather than the courthouse – and should expect the Administration to continue to claim broad authority to impose tariffs in ways that have not been attempted in over a century.

IEEPA at a Glance

Enacted in 1977, IEEPA provides the President with broad authority to regulate a variety of economic transactions to “deal with any unusual and extraordinary [foreign] threat” to U.S. national security, foreign policy, or the economy once the President declares a national emergency with respect to such threat. IEEPA explicitly “may not be exercised for any other purpose.”

Among other powers, IEEPA authorizes the President to:

investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest…. (emphasis added).

IEEPA was intended to serve as a peacetime alternative to, and effectively replace, the Trading with the Enemy Act of 1917 (TWEA), which grants similar authorities but is now reserved for times of war, following what Congress viewed as presidential abuse of the power.

IEEPA has traditionally been used to impose a wide range of economic sanctions, but in recent years has seen more novel uses. For example, in 2019, President Trump issued Executive Order 13873, which used IEEPA to address the national security concerns related to the global Information and Communications Technology Services supply chain. In 2024, President Biden issued Executive Order 14117, which used IEEPA to prevent certain transfers of, and access to, sensitive bulk U.S. government data and sensitive U.S. person data to or by countries that are considered a national security threat.

President Trump’s Tariffs

To impose steep tariffs soon after returning to office on nearly all imports from Canada, Mexico, and China, President Trump turned in February 2025 to IEEPA rather than more traditional tariff authorities that have additional procedural requirements and substantive limitations. In invoking such authority, the President cited concerns over fentanyl trafficking and unlawful immigration (hence the “Trafficking Tariffs” shorthand used by the CIT to describe such tariffs). The result was that products imported from Canada and Mexico not covered by the 2020 United States–Mexico–Canada Agreement (USMCA) are currently subject to a 25% tariff, except for Canadian energy resources and Canadian and Mexican potash, which are subject to a 10% tariff. Imports from China are currently subject to a 20% Trafficking Tariff.

On April 2, 2025—what President Trump deemed “Liberation Day”—the President imposed IEEPA-based tariffs on imports from all countries (what the CIT referred to as the “Worldwide and Retaliatory Tariffs”), subject to limited exceptions. The Worldwide and Retaliatory Tariffs are currently set at 10%, with higher, country-specific rates set to take effect on July 9, 2025.

On March 24, 2025, President Trump also imposed IEEPA tariffs on countries importing Venezuelan oil, but these tariffs were not at issue in the cases discussed below.

CIT Decision

In a 3-0 ruling, a panel of the CIT (a specialist court of first instance with exclusive jurisdiction over civil claims against the government arising out of “any law...providing for…tariffs”) struck down both the Worldwide and Retaliatory Tariffs and the Trafficking Tariffs for exceeding President Trump’s authority under IEEPA.

Worldwide and Retaliatory Tariffs

The court held that IEEPA does not provide the President with “such unbounded authority” as to enable him to impose “unlimited tariffs on goods from nearly every country,” as the Worldwide and Retaliatory Tariffs attempt to do. The court explained that such an unlimited delegation of authority to the President by Congress would be unconstitutional because, under the longstanding nondelegation doctrine, Congress must lay down an “intelligible principle” in statutes to guide and constrain the President’s exercise of authority. In addition, the court explained that under the major questions doctrine and recent Supreme Court precedent, for Congress to delegate powers of “vast economic and political significance” to the President, it must “speak clearly.” IEEPA’s language authorizing the President to “regulate…importation” does not clearly confer such sweeping tariff powers, the court held.

A key question was whether in enacting IEEPA, Congress plausibly would have intended to codify and even expand authority that had been exercised previously under TWEA (which, as noted above, has now been limited to times of war). The court contrasted the seemingly limitless Worldwide and Retaliatory Tariffs that President Trump imposed with the universal, 10% tariffs President Nixon imposed in August 1971 pursuant to TWEA—which contains identical “regulate…importation” language as IEEPA—to address a balance-of-payments crisis. The now‑defunct United States Court of Customs and Patent Appeals upheld President Nixon’s tariffs in United States v. Yoshida International, Inc. (“Yoshida II”). However, the CIT panel noted that President Nixon’s tariffs were less severe than the Worldwide and Retaliatory Tariffs and short‑lived (President Nixon terminated the TWEA tariffs months later in December 1971).

The court also determined that President Trump imposed the Worldwide and Retaliatory Tariffs in response to “a type of balance-of-payments deficit.” After President Nixon’s imposed TWEA tariffs in 1971 in response to a similar deficit, Congress enacted Section 122 of the Trade Act of 1974 specifically to deal with balance-of-payments issues. The court explained that Section 122 is the more appropriate authority than IEEPA for this type of tariff, as Section 122 “removes the President’s power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits, from the broader powers granted to a president during a national emergency under IEEPA by establishing an explicit non-emergency statute with greater limitations.” Section 122 only authorizes tariffs of up to 15%, which cannot last more than 150 days unless reauthorized by Congress. Although the Worldwide and Retaliatory Tariffs are currently set at 10%, President Trump has directed them to dramatically increase on July 9, 2025.

Trafficking Tariffs

The court also held that the Trafficking Tariffs do not comply with IEEPA. As discussed, IEEPA can only be invoked to “deal with” an “unusual and extraordinary [foreign] threat.” The court first determined that it was not precluded from reviewing the Trafficking Tariffs’ compliance with these requirements. The court also found that “deal with” requires a “direct link between an act and the problem it purports to address.” However, the court held that the Trafficking Tariffs do not “deal with” the fentanyl and immigration-related threats that President Trump cited to justify their imposition. The court determined that the government’s stated rationale of creating financial strain on the target countries to create U.S. negotiating leverage and pressure them into providing concessions to the United States does not “deal with” the stated underlying threats, and therefore the Trafficking Tariffs do not comply with IEEPA.

At the administration’s request, the Federal Circuit has stayed the CIT’s order for now. At the court’s direction, plaintiffs-appellees responded to the stay request on June 5, 2025.

D.D.C. Decision

The D.D.C. court also found that the President lacked the authority to impose the tariffs at issue under IEEPA but on different grounds. Judge Rudolph Contreras held that IEEPA does not authorize the President to impose tariffs at all. Among other reasons, Judge Contreras reasoned that, although IEEPA enables the President to “regulate…importation,” it “does not use the words ‘tariffs’ or ‘duties,’ their synonyms, or any other similar terms like ‘customs,’ ‘taxes,’ or ‘imposts.’” Furthermore, Judge Contreras found that the authority to “regulate” is not equivalent to the authority to tax and should not be interpreted as such because that “would necessarily empower the President to tariff exports, too,” which would, he noted, be unconstitutional because Article I, Section 9, Clause 5 of the Constitution explicitly forbids export taxes.

As did the CIT, Judge Contreras distinguished President Trump’s IEEPA tariffs from President Nixon’s TWEA tariffs upheld in Yoshida II. Among other differences, President Nixon’s tariffs “applied only to goods already subject to tariff reductions, and at rates that did not exceed the original statutory maximum set out by Congress,” whereas President Trump has claimed authority under IEEPA to set tariffs at any rate on any imported good.

Because the court found that IEEPA does not “provide for” the imposition of tariffs, it determined that it had jurisdiction over the lawsuit rather than the CIT (which has exclusive jurisdiction over civil claims against the government involving tariff laws).

Judge Contreras granted the government’s motion to stay his order from taking effect pending disposition of the government’s appeal before the D.C. Circuit.

Additional Trump Tariffs

In addition to these broad, IEEPA-based tariffs, President Trump has also imposed targeted tariffs under more established legal authorities and laid the groundwork for additional tariffs to be imposed pursuant to these authorities.

• Section 232: President Trump has utilized Section 232 of the Trade Expansion Act of 1962, which authorizes the President to impose industry-specific tariffs on “any articles” that the Department of Commerce determines, following an investigation, “threaten to impair” U.S. national security. President Trump has imposed Section 232 tariffs on the steel, aluminum, and automobiles industries based on investigations initiated during his first term. He has also directed new Section 232 investigations into imports of copper, timber and lumber, critical minerals, semiconductors, and pharmaceutical products. In 2021, the Federal Circuit upheld Section 232 tariffs on steel imports imposed by President Trump during his first term. Section 232 requires the Department of Commerce to complete its investigation within 270 days. While investigations can happen more rapidly, thin findings and compressed timelines could create grounds for legal challenges.
• Section 301: President Trump has imposed tariffs on China’s maritime, logistics, and shipbuilding sectors under Section 301 of the Trade Act of 1974, which authorizes the President to impose tariffs that the Office of the United States Trade Representative (USTR), following an investigation, deems necessary to counter an “unreasonable or discriminatory” practice by a foreign country that “burdens or restricts” U.S. commerce. These tariffs were imposed following a Section 301 investigation initiated by the Biden Administration in December 2024. Section 301 generally requires USTR, which must request consultations with the allegedly offending foreign country, to complete its investigation within 12 months. During President Trump’s first term, USTR completed a Section 301 investigation into China’s practices related to technology transfer, intellectual property, and innovation within seven months.

Any tariffs under these authorities remain in place, as they are not subject to the CIT or D.D.C. decisions.

Looking Ahead

If the Trafficking Tariffs and the Worldwide and Retaliatory Tariffs are ultimately struck down, U.S. importers will be eligible for a refund of the substantial tariff duties they have paid since the tariffs went into effect.

The government has appealed the CIT decision to the Federal Circuit, which temporarily stayed the order pending further review. The government has also appealed the D.D.C. decision to the D.C. Circuit. Appeals typically take at least several months to play out, but both appellate courts are expected to deal with these appeals on an expedited basis. On June 5, 2025, plaintiffs-appellees in the D.C. Circuit case submitted an unopposed motion to expedite the appeal. If the court adopts the proposed briefing schedule, the government’s opening brief will be due June 27, 2025, briefing will be complete by August 8, 2025, and oral argument will be held as soon as possible thereafter.

The next step after both the Federal and D.C. Circuits is the Supreme Court, which may decide the fate of the Trafficking Tariffs and the Worldwide and Retaliatory Tariffs. It is possible one of the parties to either case will petition the Supreme Court to intervene and decide the case earlier.

Even if the government’s appeals are unsuccessful, President Trump has other legal authorities at his disposal to maintain some, if not all, of the IEEPA tariffs. But those authorities come with their own limitations and potentially open up new avenues for litigation.

• Section 122: The CIT opinion pointed to the alternative authority in Section 122, which authorizes the President to impose tariffs “to deal with large and serious United States balance-of-payments deficits.” However, as discussed, tariffs under this authority cannot exceed 15% and cannot last more than 150 days unless reauthorized by Congress, which may not be easy given some Republicans’ unease with aspects of the President’s more sweeping tariffs.
• Sections 232 and 301: Assuming the investigations President Trump has initiated under Section 232 return the requisite findings, Section 232 could soon provide an alternative legal basis to maintain some of the IEEPA tariffs on specific industries or sectors. President Trump could initiate additional Section 232 or Section 301 investigations, although these would take additional time to complete. There is no limit on the rate or duration of tariffs imposed under these authorities.
• Section 201: During his first term, President Trump imposed tariffs on washing machines and solar products pursuant to Section 201 of the Trade Act of 1974, which authorizes tariffs on an “article” following an investigation by the International Trade Commission (ITC) that finds high levels of foreign imports are a “substantial cause of serious injury” to competing domestic industry. President Trump has yet to issue new tariffs under Section 201, but he could direct the ITC to conduct additional Section 201 investigations, and—if the ITC returns the requisite findings—impose additional targeted tariffs under such authority. However, tariffs under Section 201 may not exceed 50% and must be “phased down at regular intervals” after one year.
• Section 338: Section 338 of the Tariff Act of 1930 remains the wild card on the table. Section 338 authorizes the President to impose tariffs on imports from any foreign county “whenever he shall find as a fact that such country…[d]iscriminates in fact against the commerce of the United States.” There are no limits on the rate of tariff the President can impose under Section 338, nor on its duration. However, this authority has never been used to impose tariffs and is legally untested for such purpose. Nonetheless, Section 338 offers the most direct replacement should the IEEPA tariffs ultimately be struck down, and the Trump Administration has not hesitated to invoke long-dormant authorities in other contexts.

There is also a broader implication of the recent rulings that extends beyond the tariff context and may be felt in other contexts. The invocation of the major questions doctrine to limit presidential authority under IEEPA may portend increased judicial oversight of the President’s invocation of IEEPA in other contexts, as well. In addition, the CIT’s narrowing construction of what is necessary to “deal with” the declared threat may end up providing grounds to challenge other actions under IEEPA, including perhaps even the basis for U.S. sanctions regimes. This increased judicial oversight may constrain one of the Executive’s most expansive and powerful tools for addressing national security threats in recent years.

Haylee Levin, a Summer Associate in Morrison Foerster’s Washington, D.C. Office contributed to the writing of this alert.