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.
Shortly after publication of this post, the Trump administration filed a petition for a writ of certiorari to the U.S. Supreme Court, which has expedited its review with oral arguments scheduled for November 5, 2025. The tariffs will remain in effect pending the Supreme Court’s review.
On August 29, 2025, the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) issued a 7-4 decision upholding the U.S. Court of International Trade’s (the “CIT”) May 28, 2025 ruling striking down President Trump’s fentanyl trafficking-related tariffs imposed on Canada, Mexico, and China (referred to by the Federal Circuit as “Trafficking Tariffs”), and the broad reciprocal tariffs announced on April 2, 2025 (referred to by the Federal Circuit as “Reciprocal Tariffs”).[1] The Federal Circuit’s opinion held 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 the challenged Trafficking Tariffs and Reciprocal Tariffs. In a concurrent order, the Federal Circuit stayed the effects of its opinion until October 14, 2025, while the U.S. government appeals the ruling to the U.S. Supreme Court.
The Trafficking and Reciprocal Tariffs make up the majority of the tariffs issued so far under the second Trump administration. However, the Federal Circuit decision does not apply to tariffs issued or under consideration by the administration under more established trade-related authorities, such as those relating to steel, aluminum, copper, automobiles, pharmaceuticals, semiconductors, timber, and processed critical minerals under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962 (“Section 232”).
Statutory Interpretation and Delegation of Powers
IEEPA authorizes the President to take economic action in response to emergencies declared under the National Emergencies Act, 50 U.S.C. § 1601 et seq. (“NEA”). As such, most modern U.S. economic sanctions programs—such as those imposing sanctions on Iran, Russia, and the Russian-occupied regions of Ukraine—are based on IEEPA. In imposing the Trafficking and Reciprocal Tariffs under IEEPA, President Trump first declared or expanded national emergencies under the NEA related to fentanyl trafficking (due to the alleged failures of Mexico, Canada, and China to “prevent” such trafficking) and “large and persistent annual U.S. goods trade deficits,” respectively.
The Federal Circuit found that imposition of the Trafficking and Reciprocal Tariffs runs contrary to the text of IEEPA and Congress’s intent in passing IEEPA. The Federal Circuit concluded that the text of IEEPA grants the power to take varied actions in response to declared national emergencies, none of which, when read together, grant the President the authority to impose taxes and tariffs. The Federal Circuit’s conclusion is based on the premise that taxes and tariffs are the prerogative of Congress, which has the “power of the purse” under the Constitution, and, in passing IEEPA, Congress did not intend to grant the President the authority to assume one of Congress’s core powers. According to the Federal Circuit, the magnitude of the Trafficking and Reciprocal Tariffs—an estimated $2.3 to $3.3 trillion over the relevant budgetary timeframe—further emphasizes the point. The Federal Circuit concluded that decisions of such “vast economic and political significance” as the Trafficking and Reciprocal Tariffs require “clear congressional authorization.” The Federal Circuit accordingly also concluded that the U.S. government’s claimed interpretation of IEEPA runs contrary to the “major questions doctrine,” as the President has never previously claimed powers of such magnitude under IEEPA. According to the Federal Circuit, the “major questions doctrine” further emphasizes the need for express Congressional authorization for the powers President Trump has sought to invoke under IEEPA.
Tariffs are not Necessarily Outside the Scope of IEEPA
The U.S. government argued that the legislative history shows Congress intended to include tariffs within the President’s powers under IEEPA. The Federal Circuit did not explicitly rule against the government’s position, but rather held more narrowly that the legislative history showed that IEEPA did not authorize tariffs as expansive as the Trafficking and Reciprocal Tariffs. In particular, the Federal Circuit found the U.S. government’s argument unpersuasive because the Trafficking and Reciprocal Tariffs are “unbounded in scope, amount, and duration” and “apply to nearly all articles imported into the United States (and, in the case of the Reciprocal Tariffs, apply to almost all countries).”
Remand to the CIT for Remedies
The Federal Circuit remanded the case to the CIT for reconsideration of the remedy granted to the plaintiffs. In its May 28 order, the CIT enjoined collection of the Trafficking and Reciprocal Tariffs from any and all parties, not just the plaintiffs challenging the tariffs. The Federal Circuit directed the CIT to consider whether the “universal injunction” (also commonly referred to as a “nationwide injunction”) was an appropriate remedy in light of the June 2025 U.S. Supreme Court decision in Trump v. CASA, in which the Supreme Court ruled that “universal injunctions likely exceed the equitable authority that Congress has given to federal courts.”
Concurrence and Dissent
In a concurring opinion, four of the judges joining the majority opinion took the more expansive view that IEEPA does not authorize the President to impose tariffs altogether. The concurring judges’ opinion emphasized that delegation of Congress’s powers to impose taxes and tariffs must comply with limits on delegation of taxation power to the President as articulated in the U.S. Supreme Court’s opinion in Federal Energy Administration v. Algonquin SNG, Inc., 426 U.S. 548 (1976), which upheld the President’s authority to impose tariffs under Section 232. In Algonquin, the Supreme Court upheld Section 232 on the basis that the President’s delegated taxation powers were bounded by required factual inquires.
In a lengthy dissenting opinion, four judges on the Federal Circuit disagreed with the majority’s conclusions, arguing that imposition of the Trafficking and Reciprocal Tariffs was within the President’s authority under IEEPA to address declared national emergencies. At a high level, the dissenting judges concluded that IEEPA necessarily constitutes a broad delegation of authority to the President, that the very nature of emergency power laws differs from other statutory delegations, and that the President complied with the procedural requirements of the NEA and IEEPA in imposing the Trafficking and Reciprocal Tariffs. Additionally, with respect to the Trafficking Tariffs, the dissent further argues that the President’s intent to use the tariffs as a “bargaining chip” in fact validated use of such tariffs as an appropriate exercise of Presidential authority under IEEPA, directly contradicting the conclusion reached by the CIT in its May 28 decision.
Implications of Federal Circuit Judgment and Next Steps
The Federal Circuit stayed the effect of its judgment and order until October 14, 2025. President Trump has made clear on social media that he intends to appeal the decision to the U.S. Supreme Court. The U.S. Supreme Court is expected to review the Federal Circuit’s decision, given the significant economic and political questions at issue in a prominent program of the current presidential administration, as well as the involvement of twelve state attorneys general.[2] Where and when the U.S. Supreme Court will likely rule on the Trafficking and Reciprocal Tariffs is presently uncertain, with the Federal Circuit’s three different opinions on the matter illustrating a variety of possible outcomes.
Notwithstanding such uncertainty, the Federal Circuit’s opinion did not rule on whether other tariffs imposed under IEEPA, such as those President Trump imposed on Brazil in a July 30 executive order and on India in an August 6 executive order,[3] are invalid as a matter of law, and the U.S. Supreme Court could likewise choose to rule narrowly in this case, even if it upholds the Federal Circuit’s opinion. Additionally, the Trump administration has used Section 232 extensively to impose tariffs on products including automobiles and automobile parts, steel and aluminum, and semi finished copper products and intensive copper derivative products; these tariffs are not at risk under the Federal Circuit’s ruling.[4] If the U.S. Supreme Court upholds the Federal Circuit decision, the Trump administration may seek to rely on Section 232 and other more-established authorities to impose tariffs.
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 the CIT’s May 28, 2025 opinion in our prior blog post, linked here.
We discussed the underlying tariffs in prior blog posts linked here: https://www.clearytradewatch.com/2025/08/president-trump-expands-global-reciprocal-tariffs-and-imposes-additional-tariffs-on-brazil-canada-and-india/, https://www.clearytradewatch.com/2025/07/president-trump-announces-plans-to-impose-modified-reciprocal-tariffs-and-new-tariffs-on-canada-and-mexico-on-august-1/, 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] Plaintiffs in a parallel case challenging the legality of President Trump’s Trafficking and Reciprocal Tariffs filed an appeal to the U.S. Supreme Court in June 2025, after 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 those tariffs from the plaintiffs. The U.S. government appealed Judge Contreras’s decision to the U.S. Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”). Neither the D.C. Circuit nor the U.S. Supreme Court have yet heard appeals in the case.
[3] We discussed these tariffs in our prior blog post.
[4] We discussed other tariff authorities available to President Trump in our prior blog post.