For more insights and analysis from Cleary lawyers on policy and regulatory developments from a legal perspective, visit What to Expect From a Second Trump Administration.

On May 28, 2025, the U.S. Court of International Trade (“CIT”) issued a decision holding that President Trump exceeded his authority under the International Emergency Economic Powers Act of 1977, 50 U.S.C. 1701, et seq. (“IEEPA”) in imposing fentanyl trafficking-related tariffs on Canada, Mexico, and China (referred to by the CIT as “Trafficking Tariffs”), and the broad reciprocal tariffs announced on April 2, 2025 (referred to by the CIT as “Worldwide and Retaliatory Tariffs”).[1]  In a Per Curium opinion, the three-judge panel granted summary judgment to a group of private plaintiffs and state attorneys general who had challenged the Trump administration tariffs imposed under IEEPA, vacated the Executive Orders imposing the tariffs, and enjoined collection of the tariffs.[2]  On May 29, 2025, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) temporarily stayed the CIT’s order, keeping the relevant tariffs in effect while the Federal Circuit considers the case. 

Prior presidential actions and the scope of IEEPA

Under IEEPA, the president has authority to take certain actions in response to declared national emergencies, the declaration of which is regulated by the National Emergencies Act (“NEA”).  Previous presidential administrations, including the first Trump administration, have used IEEPA primarily for the imposition of trade embargoes and economic sanctions, and no prior presidential administration had claimed authority under IEEPA to impose tariffs on U.S. trading partners.  The CIT held that the language of IEEPA does not authorize the president to impose unlimited tariffs, concluding that an unlimited delegation of power to set tariff rates—a power vested in Congress by the U.S. Constitution—would be unconstitutional. 

The CIT notes that in 1974, President Nixon imposed tariffs on products entering the United States, citing his authority under the Trading With the Enemy Act, 50 U.S.C. 4301 et. seq. (“TWEA”).  In United States v. Yoshida Int’l. Inc., 526 F.2d 560, 584 (C.C.P.A. 1975), the U.S. Court of Appeals for the Federal Circuit held that the imposition of those tariffs was within the president’s authority under TWEA.  The CIT viewed Congress to have deliberately delegated narrower tariff authority to the president under IEEPA than under TWEA in response to the Yoshida ruling.  In drafting and passing IEEPA, Congress drew an express distinction between the authorities delegated to the president by TWEA versus IEEPA, and limited the president’s broader use of authority granted by TWEA to wartime.  Accordingly, the legislative history showed that Congress had intended to restrict the president’s authority to impose tariffs in response to declared national emergencies by making IEEPA’s grant of authority narrower than that of TWEA.

Worldwide and Retaliatory Tariffs: Presidential authority to address balance-of-payment deficits

Additionally, the CIT noted that Congress granted the president authority to impose temporary tariffs under Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132, to address “balance-of-payment deficits,” which is the express purpose of President Trump’s Worldwide and Retaliatory Tariffs.  The CIT held that the Worldwide and Retaliatory Tariffs must accordingly comply with the requirements of Section 122 of the Trade Act of 1974, and issuance of such tariffs under IEEPA is outside presidential authority.

Trafficking Tariffs: Presidential authority to “deal with an unusual or extraordinary threat”

The CIT also held that the Trafficking Tariffs do not “deal with an unusual or extraordinary threat,” as required under IEEPA.  Specifically, the CIT held that the Trafficking Tariffs fail to “deal with” the invoked threat (the flow of illicit fentanyl into the United States) because “[c]ustom’s collection of tariffs on lawful imports does not evidently relate to foreign governments’ efforts ‘to arrest, seize, detain, or otherwise intercept’ bad actors within their respective jurisdictions.”  The CIT found that the U.S. government’s acknowledgment that the Trafficking Tariffs were intended to create negotiating leverage with Canada, Mexico, and China conceded the point that the Trafficking Tariffs do not “deal with” the invoked “unusual or extraordinary threat.”  The CIT found that an argument that creating negotiation leverage could constitute dealing with a threat would mean that IEEPA would authorize essentially any presidential action, a conclusion incompatible with the Constitution and the text of IEEPA.  With respect to the Worldwide and Retaliatory Tariffs, the CIT did not address whether those tariffs invoke or “deal with an unusual or extraordinary threat,” having already held those tariffs to be outside the scope of presidential authority under IEEPA.

Implications of CIT judgment and next steps

The CIT entered summary judgment against the U.S. government, vacating the Executive Orders imposing the challenged tariffs and enjoining imposition of the tariffs.  The U.S. government has appealed the case to the Federal Circuit, which on May 29 granted a stay of the CIT’s order.  The case is expected to make its way to the U.S. Supreme Court, in particular given the involvement of twelve state attorneys general and the U.S. government, and the significant consequences of the underlying actions.  Timing of appellate judicial review is presently uncertain, and will depend on whether the U.S. court system grants expedited review under emergency procedures.

Although the future of many of President Trump’s key second-term tariffs are now in question, tariffs imposed under legal authorities other than IEEPA, such as those imposed on steel and aluminum, and automobiles and certain automotive parts, under Section 232 of the Trade Expansion Act of 1962 (“Section 232”), and duties imposed on most Chinese-origin products under Section 301 of the Trade Act of 1974, remain in effect.[3]  The decision is also unlikely to impact ongoing investigations under Section 232, including those into pharmaceuticals, semiconductors and semiconductor manufacturing equipment, and commercial aircraft, which the Trump administration is expected to conclude in the near-term.

Cleary’s international trade team is continuing to track developments on the Trump administration’s tariff policy, and is available to provide guidance on the effects of the U.S. Court of International Trade’s opinion and order.

[1] We discussed these tariffs in our prior blog posts, linked here: https://www.clearygottlieb.com/news-and-insights/publication-listing/president-trump-imposes-sweeping-reciprocal-tariffs, https://www.clearygottlieb.com/news-and-insights/publication-listing/president-trump-imposes-tariffs-on-canada-and-mexico-additional-tariffs-on-china, https://www.clearygottlieb.com/news-and-insights/publication-listing/president-trump-imposes-additional-tariffs-on-china-delays-tariffs-on-canada-and-mexico.

[2] On May 29, 2025, Judge Rudolph Contreras of the U.S. District Court for the District of Columbia issued a brief order granting a preliminary injunction enjoining collection of the same tariffs, but granted a 14-day stay of the preliminary injunction to allow the parties to seek review in the U.S. Court of Appeals for the District of Columbia Circuit.

[3] We discussed other tariff authorities available to President Trump in our prior blog post: https://www.clearytradewatch.com/2025/01/trump-tariffs-whats-happened-whats-potentially-coming-and-how-to-prepare/.