In 24 hours, two federal courts injected significant uncertainty into the viability of tariffs implemented by President Trump under the authority of the International Emergency Economic Powers Act (IEEPA).
On May 28, 2025, the U.S. Court of International Trade issued a permanent injunction blocking enforcement of IEEPA-based tariffs. The next day, the U.S. District Court for the District of Columbia issued a preliminary injunction restricting the administration from imposing these tariffs on specific plaintiffs, two Illinois-based toy companies. Despite these lower court rulings, the tariffs remain in effect pending appellate review.
This alert provides an overview of the tariffs in question, the legal challenges, and the current state of play.
Background: IEEPA and Trump’s Trade War
IEEPA grants presidents broad authority to regulate international economic transactions in response to a national emergency declared due to an “unusual and extraordinary threat... to the national security, foreign policy, or economy of the United States.” Historically, IEEPA has been used to impose sanctions, freeze assets, and regulate specific transactions related to declared national emergencies.
The Trump administration cited IEEPA as the legal basis for a series of broad import tariffs imposed in early 2025. This was a novel application of the statute. No previous president had used IEEPA to impose tariffs in this manner.
The IEEPA-based tariffs at issue include:
- Fentanyl & Human Trafficking Tariffs: Implemented in February and March 2025, these tariffs targeted imports from China, Mexico, and Canada. The administration cited the alleged failure of these countries to adequately curb the trafficking of fentanyl and other illicit drugs, as well as to control human trafficking and undocumented immigration across North American borders, as the national emergency justifying these duties. Tariff rates varied, with some reaching 25%.
- Reciprocal Tariffs: In early April 2025, the Trump administration established a baseline tariff of 10% on most imports globally. The framework also included provisions for imposing higher, individualized “reciprocal” tariffs on countries with which the United States has significant trade deficits. The stated rationale behind these tariffs was to address perceived imbalances in international trade and strengthen the U.S. economic position.
These IEEPA-based tariffs are distinct from other trade measures implemented under different statutory authorities, such as Section 232 of the Trade Expansion Act of 1962 (often used for steel and aluminum tariffs based on national security) and Section 301 of the Trade Act of 1974 (typically addressing unfair trade practices). The recent court rulings discussed below do not directly impact tariffs imposed under these other authorities.
Landmark Rulings
President Trump’s use of IEEPA to impose broad tariffs quickly drew legal challenges from businesses, industry associations, and several U.S. states. Plaintiffs argued the President exceeded IEEPA’s authority and infringed upon Congress’s constitutional power to regulate commerce and levy duties.
V.O.S. Selections, Inc., et al. v. United States (U.S. Court of International Trade)
On May 28, 2025, a three-judge panel of the U.S. Court of International Trade (CIT) issued a landmark decision in consolidated cases challenging the IEEPA tariffs.
The CIT ruled the Trump administration exceeded the scope of IEEPA’s delegated executive authority to “regulate…importation.” The court reasoned that declaring a national emergency “is not a talisman enabling the President to rewrite the tariff schedules.”
The CIT held that Trump’s reciprocal tariffs invoked emergency powers to address trade deficits, which is not an “emergency” as contemplated by IEEPA. Congress provides other specific statutory tools, such as Section 122 of the Trade Act of 1974, which come with their own limitations, to address balance-of-payments deficits.
The ruling states Congress cannot delegate unbridled authority to the country’s Chief Executive to impose tariffs under IEEPA without violating fundamental tenets of the U.S. Constitution.
As for the so-called “trafficking tariffs,” the CIT held the broad application of tariffs on a wide range of goods was not sufficiently tailored to the declared drug and human trafficking emergencies. Using tariffs as leverage to counter these problems did not, in the court’s opinion, “deal with an unusual and extraordinary threat” as statutorily required.
As a result of its findings, the CIT issued a nationwide injunction to halt collection of these IEEPA-based tariffs and ordered the government to cease enforcement.
Learning Resources, Inc., et al. v. Trump (U.S. District Court for the District of Columbia)
In a related but separate legal track, on May 29, 2025, the U.S. District Court for the District of Columbia issued a ruling in a case brought by a different set of plaintiffs challenging the IEEPA tariffs.
That court, echoing some of the CIT’s reasoning, found the plaintiffs were likely to succeed on their claim that the President’s actions exceeded his statutory authority under IEEPA.
However, the D.C. District Court’s preliminary injunction was narrower in scope, applying only to the specific plaintiffs in that case, rather than a nationwide injunction like the one issued by the CIT.
Several other legal challenges to the IEEPA tariffs remain pending.
Status of Tariffs Pending Appeals
Both cases were immediately appealed by the Trump Administration to the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of Appeals for the D.C. Circuit, respectively. The lower court rulings have been stayed, and, as of this writing, the IEEPA-based tariffs remain in effect. Ultimately, this issue is likely headed to the U.S. Supreme Court.
Key Takeaways for Businesses
The status quo remains for now; the challenged tariffs are still being collected at U.S. ports of entry. But the situation is highly fluid and continues to present considerable uncertainty for businesses.
Affected companies should take the following steps:
- Budget for these ongoing costs and employ tariff mitigation strategies.
- Maintain meticulous records of tariffs paid, in the event IEEPA tariffs are held to be unlawful at the end of the appellate process and importers are entitled to refunds.
- Be aware of alternative tariff mechanisms available to the administration. Current legal challenges to the IEEPA tariffs do not directly affect measures taken under other statutory authority. Even if the courts invalidate the IEEPA tariffs, President Trump can use alternative tariff authorities to achieve similar policy objectives.
- Plan strategically by reviewing supply chains, understanding contractual obligations regarding tariff costs, exploring potential alternative sourcing options, and staying closely advised by legal counsel and trade experts.
- Stay agile and informed. The legal battle over the President’s authority to use IEEPA as a broad tariff-setting tool is in its early stages of appellate review. Businesses affected by these tariffs should anticipate continued uncertainty in the near term.
- Consult with legal counsel to understand the specific implications for their operations and to assess potential strategies for mitigating risk and navigating this complex trade environment
Woods Rogers continues to monitor these developments closely and will provide updates as they become available.
